UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C.  20549
                                   FORM 10-K

(Mark One)

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the fiscal year ended December 31, 1996

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

    For the transition period from __________________ to _________________


                        Commission file number  0-19139

                           CNL INCOME FUND VIII, LTD.
             (Exact name of registrant as specified in its charter)

              Florida                                  59-2963338
  (State or other jurisdiction of         (I.R.S. Employer Identification No.)
  incorporation or organization)

                        400 East South Street, Suite 500
                            Orlando, Florida  32801
          (Address of principal executive offices, including zip code)

      Registrant's telephone number, including area code:  (407) 422-1574

         Securities  registered  pursuant to Section 12(b) of the Act:

   Title of each class:           Name of exchange on which registered:
           None                              Not Applicable

         Securities  registered  pursuant to Section  12(g) of the Act:

              Units of limited partnership interest ($1 per Unit)
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:  Yes   [X]      No  [ ]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [x]

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant:   The  registrant   registered  an  offering  of  units  of  limited
partnership  interest  (the  "Units") on Form S-11 under the  Securities  Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $1 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None


<PAGE>

                                     PART I


Item 1.  Business

         CNL Income Fund VIII, Ltd. (the "Registrant" or the "Partnership") is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on August 18, 1989. The general  partners of the  Partnership are Robert
A.  Bourne,  James  M.  Seneff,  Jr.  and  CNL  Realty  Corporation,  a  Florida
corporation  (the  "General  Partners").   Beginning  on  August  2,  1990,  the
Partnership offered for sale up to $35,000,000 of limited partnership  interests
(the  "Units")  (35,000,000  Units at $1 per Unit)  pursuant  to a  registration
statement on Form S-11 under the Securities  Act of 1933, as amended,  effective
January 30, 1990.  The offering  terminated  on March 7, 1991, at which date the
maximum  offering  proceeds of $35,000,000  had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

         The  Partnership  was organized to acquire both newly  constructed  and
existing  restaurant  properties,  as well as properties upon which  restaurants
were to be  constructed  (the  "Properties"),  which  are  leased  primarily  to
operators of national and regional fast-food and family-style  restaurant chains
(the "Restaurant Chains").  Net proceeds to the Partnership from its offering of
Units,  after  deduction  of  organizational  and  offering  expenses,  totalled
$30,975,000,  and were used to acquire 38  Properties,  including  interests  in
eight  Properties  owned  by  joint  ventures  in  which  the  Partnership  is a
co-venturer,  and  to  establish  a  working  capital  reserve  for  Partnership
purposes.  During the year ended  December 31, 1995,  the  Partnership  sold its
Property in Ocoee, Florida and reinvested the majority of the net sales proceeds
in a Shoney's in North Fort Myers, Florida. Also, during the year ended December
31, 1995, the Partnership sold two Properties in Jacksonville,  Florida.  During
the year ended December 31, 1996, the  Partnership  reinvested the remaining net
sales proceeds from the 1995 sale of the Property in Ocoee,  Florida, to acquire
one  additional  Property  indirectly  through  a joint  venture  in  which  the
Partnership is a co-venturer. Also, during the year ended December 31, 1996, the
Partnership  sold its  Property  in Orlando,  Florida.  As a result of the above
transactions the Partnership  currently owns 36 Properties,  including interests
in nine  Properties  owned  by joint  ventures  in which  the  Partnership  is a
co-venturer.  The  Properties  are leased on a triple-net  basis with the lessee
responsible  for all repairs and  maintenance,  property  taxes,  insurance  and
utilities.

         The  Partnership  will hold its Properties  until the General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  In general,  the General Partners plan to seek the sale of some of
the  Properties  commencing  seven  to 12 years  after  their  acquisition.  The
Partnership  has no  obligation  to sell all or any portion of a Property at any
particular  time,  except as may be required  under  property  purchase  options
granted to certain lessees.

Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases. The leases of the Properties owned by the Partnership and
the joint ventures in which the Partnership is a co-venturer provide for initial
terms,  ranging  from 14 to 20 years (the  average  being 18 years),  and expire
between  2005 and 2016.  All leases are on a triple-net  basis,  with the lessee
responsible  for all repairs and  maintenance,  property  taxes,  insurance  and
utilities.  The leases of the Properties  provide for minimum base annual rental
payments (payable in monthly installments) ranging from approximately $41,300 to
$213,800.  All of the leases  provide  for  percentage  rent,  based on sales in
excess of a specified  amount.  In  addition,  a majority of the leases  provide
that,  commencing in specified  lease years (ranging from the third to the sixth
lease  year),  the annual base rent  required  under the terms of the lease will
increase.

         Generally,  the  leases  of the  Properties  provide  for  two to  four
five-year  renewal  options  subject  to the same  terms and  conditions  as the
initial  lease.  Certain  lessees  also have been  granted  options to  purchase
Properties at the Property's then fair market value after a specified portion of
the lease term has elapsed. Under the terms of certain leases,  the option
purchase price may equal the Partnership's  original cost to purchase the
Property  (including  acquisition  costs), plus a specified percentage  from the


                                       1


<PAGE>

date  of  the  lease  or a  specified  percentage  of the Partnership's purchase
price, if that amount is greater than the Property's fair market value at the
time the purchase option is exercised.

         The leases also  generally  provide that, in the event the  Partnership
wishes to sell the Property  subject to that lease,  the Partnership  first must
offer the  lessee  the right to  purchase  the  Property  on the same  terms and
conditions,  and for the same  price,  as any offer  which the  Partnership  has
received for the sale of the Property.

Major Tenants

         During 1996, four lessees of the Partnership and its consolidated joint
venture,   (i)  Golden  Corral  Corporation,   (ii)  Carrols  Corporation  (iii)
Restaurant  Management Services,  Inc. and (iv) Flagstar  Enterprises,  Inc. and
Quincy's  Restaurants,  Inc. (which are affiliated entities under common control
of Flagstar Corporation) (hereinafter referred to as Flagstar Corporation), each
contributed  more than ten  percent of the  Partnership's  total  rental  income
(including rental income from the Partnership's  consolidated  joint venture and
the  Partnership's  share  of  rental  income  from  eight  Properties  owned by
unconsolidated  joint  ventures).   As  of  December  31,  1996,  Golden  Corral
Corporation  was the lessee under leases relating to four  restaurants,  Carrols
Corporation was the lessee under leases relating to five restaurants, Restaurant
Management  Services,  Inc.  was  the  lessee  under  leases  relating  to  five
restaurants  and Flagstar  Corporation  was the lessee under leases  relating to
five  restaurants.  It is anticipated that, based on the minimum rental payments
required by the leases,  these four lessees (or group  affiliated  lessees) each
will continue to  contribute  more than ten percent of the  Partnership's  total
rental  income in 1997 and  subsequent  years.  In  addition,  three  Restaurant
Chains, Golden Corral Family Steakhouse  Restaurants,  Burger King and Shoney's,
each  accounted  for more than ten  percent of the  Partnership's  total  rental
income in 1996  (including  rental  income from the  Partnership's  consolidated
joint venture and the Partnership's share of rental income from eight Properties
owned by unconsolidated joint ventures).  In subsequent years, it is anticipated
that these three  Restaurant  Chains each will continue to account for more than
ten percent of the Partnership's total rental income to which the Partnership is
entitled  under  the  terms of the  leases.  Any  failure  of these  lessees  or
Restaurant Chains could materially  affect the  Partnership's  income. No single
tenant  or  group of  affiliated  tenants  lease  Properties  with an  aggregate
carrying value,  excluding acquisition fees and certain acquisition expenses, in
excess of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements

         The Partnership has entered into a joint venture  arrangement,  Woodway
Joint Venture, with an unaffiliated entity to purchase and hold one Property. In
addition,   the   Partnership  has  entered  into  two  separate  joint  venture
arrangements,  Asheville  Joint Venture and CNL Restaurant  Investments II, with
affiliates of the General Partners,  to purchase and hold seven  Properties.  In
May 1996, the Partnership entered into a joint venture  arrangement,  Middleburg
Joint  Venture,  with an affiliate of the General  Partnership,  to purchase and
hold one property.

         The joint  venture  arrangements  provide for the  Partnership  and its
joint venture  partners to share in all costs and benefits  associated  with the
joint ventures in accordance with their respective  percentage  interests in the
joint ventures.  The Partnership and its joint venture partners are also jointly
and severally  liable for all debts,  obligations  and other  liabilities of the
joint ventures.

         Woodway Joint Venture,  Asheville  Joint Venture and  Middleburg  Joint
Venture each have an initial term of 20 years and,  after the  expiration of the
initial term,  continue in existence from year to year unless  terminated at the
option  of  either  joint  venturer  or by an event of  dissolution.  Events  of
dissolution  include the  bankruptcy,  insolvency  or  termination  of any joint
venturer,  sale of the Property owned by the joint venture and mutual  agreement
of the Partnership and each joint venture partner to dissolve the joint venture.
CNL Restaurant  Investments II's joint venture  agreement does not provide for a
fixed term,  but  continues in existence  until  terminated  by any of the joint
venturers.

         The  Partnership  has  management  control of Woodway Joint Venture and
shares  management  control equally with affiliates of the General  Partners for
Asheville  Joint  Venture,  CNL Restaurant  Investments II and Middleburg  Joint
Venture.  The joint venture agreements restrict each venturer's ability to sell,
transfer or assign its joint venture interest without first offering it for sale
to its joint venture partner, either upon such terms and  conditions  as to
which the  venturers may agree or, in the event the venturers  cannot agree, on
the same terms and conditions as any offer from a third party to purchase such
joint venture interest.

         Net cash flow from operations of Woodway Joint Venture, Asheville Joint
Venture,  CNL  Restaurant   Investments  II  and  Middleburg  Joint  Venture  is
distributed 88 percent, 86 percent, 37 percent and 12 percent,  respectively, to

                                       2

<PAGE>

the  Partnership  and the  balance  is  distributed  to each of the other  joint
venture partners in accordance with their respective  percentage interest in the
joint venture.  Any liquidation  proceeds,  after paying joint venture debts and
liabilities and funding reserves for contingent liabilities, will be distributed
first to the joint venture  partners with positive  capital account  balances in
proportion to such balances  until such balances  equal zero,  and thereafter in
proportion  to each joint  venture  partner's  percentage  interest in the joint
venture.

Certain Management Services

         CNL Investment Company, an affiliate of the General Partners,  provided
certain  services  relating to management of the  Partnership and its Properties
pursuant to a management  agreement with the  Partnership  through  December 31,
1994.  Under  this  agreement,   CNL  Investment  Company  was  responsible  for
collecting rental payments, inspecting the Properties and the tenants' books and
records, assisting the Partnership in responding to tenant inquiries and notices
and providing  information to the Partnership about the status of the leases and
the  Properties.  CNL Investment  Company also assisted the General  Partners in
negotiating the leases.  For these  services,  the Partnership had agreed to pay
CNL  Investment  Company  an  annual  fee of one  percent  of the  sum of  gross
operating  revenues from  Properties  wholly owned by the  Partnership  plus the
Partnership's  allocable  share of gross revenues of joint ventures in which the
Partnership  is a  co-venturer,  but  not in  excess  of  competitive  fees  for
comparable  services.  Under the  management  agreement,  the  management fee is
subordinated  to receipt by the Limited  Partners of an aggregate,  ten percent,
cumulative,  noncompounded annual return on their adjusted capital contributions
(the "10% Preferred  Return"),  calculated in accordance with the  Partnership's
limited partnership agreement (the "Partnership Agreement").

         Effective  January 1,  1995,  certain  officers  and  employees  of CNL
Investment  Company  became  officers and employees of CNL Income Fund Advisors,
Inc., an affiliate of the General Partners,  and CNL Investment Company assigned
its rights in, and its  obligations  under,  the  management  agreement with the
Partnership to CNL Income Fund Advisors, Inc. In addition,  effective October 1,
1995, CNL Income Fund Advisors, Inc. assigned its rights in, and its obligations
under, the management agreement with the Partnership to CNL Fund Advisors,  Inc.
All of the terms and  conditions  of the  management  agreement,  including  the
payment of fees, as described above, remain unchanged.

         The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.

Competition

         The fast-food and family-style  restaurant business is characterized by
intense  competition.  The restaurants on the Partnership's  Properties  compete
with  independently  owned  restaurants,  restaurants which are part of local or
regional chains and restaurants in other well-known  national chains,  including
those offering different types of food and service.

         At the time the Partnership elects to dispose of its Properties,  other
than as a result of the exercise of tenant options to purchase  Properties,  the
Partnership  will be in  competition  with other  persons and entities to locate
purchasers for its Properties.

Employees

         The  Partnership   has  no  employees.   The  officers  of  CNL  Realty
Corporation  and the officers and employees of CNL Fund Advisors,  Inc.  perform
certain  services for the  Partnership.  In addition,  the General Partners have
available to them the  resources  and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates,  who may
also perform certain services for the Partnership.

Item 2.  Properties

         As of December 31, 1996,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  36  Properties  located  in  12  states.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed  with this  report for a listing of the  Properties  and their  respective
costs, including acquisition fees and certain acquisition expenses.

Description of Properties

                                       3

 <PAGE>


         Land. The Partnership's  Property sites range from approximately 17,400
to 467,400  square  feet  depending  upon  building  size and local  demographic
factors.  Sites  purchased  by  the  Partnership  are  in  locations  zoned  for
commercial use which have been reviewed for traffic patterns and volume.

         Buildings.  Each of the Properties owned by the Partnership  includes a
building that is one of a Restaurant  Chain's  approved  designs.  The buildings
generally are  rectangular  and are  constructed  from various  combinations  of
stucco,  steel,  wood, brick and tile.  Building sizes range from  approximately
1,300 to 10,900  square  feet.  All  buildings  on  Properties  acquired  by the
Partnership are  freestanding  and surrounded by paved parking areas.  Buildings
are suitable for  conversion  to various  uses,  although  modifications  may be
required prior to use for other than restaurant operations.

         Generally,  a  lessee  is  required,  under  the  terms  of  its  lease
agreement,  to make such capital  expenditures as may be reasonably necessary to
refurbish  buildings,  premises,  signs and  equipment  so as to comply with the
lessee's  obligations,  if applicable,  under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.

         Leases with Major Tenants.  The terms of the leases with the
Partnership's major tenants as of December 31, 1996 (see Item 1.  Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

         Golden Corral  Corporation leases four Golden Corral  restaurants.  The
initial  term of each  lease is 15 years  (expiring  in  2005)  and the  average
minimum base annual rent is approximately  $163,500 (ranging from  approximately
$145,500 to $189,700).

         Restaurant Management Services leases four Shoney's restaurants and one
Popeyes restaurant. The initial term of each lease is 20 years (expiring between
2010 and  2015)  and the  average  minimum  base  annual  rent is  approximately
$103,500 (ranging from approximately $41,300 to $139,400).

         Carrols  Corporation  leases five Burger King restaurants.  The initial
term of each lease is 20 years  (expiring in 2011) and the average  minimum base
annual rent is approximately  $111,400 (ranging from  approximately  $106,300 to
$120,600).

         Flagstar  Corporation leases four Hardees  restaurants and one Quincy's
restaurant.  The initial term of each lease is 20 years  (expiring  between 2010
and 2011) and the average  minimum  base annual  rent is  approximately  $73,900
(ranging from approximately $58,100 to $101,100).

         The General Partners consider the Properties to be well-maintained  and
sufficient for the Partnership's operations.


Item 3.  Legal Proceedings

         Neither the  Partnership,  nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties,  is a party to, or
subject to, any material pending legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable.



                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         As of  February  28,  1997,  there were 3,458  holders of record of the
Units.  There  is no  public  trading  market  for  the  Units,  and  it is  not

                                       4

<PAGE>

anticipated  that a public market for the Units will develop.  Limited  Partners
who wish to sell  their  Units may offer  the  Units  for sale  pursuant  to the
Partnership's  distribution reinvestment plan (the "Plan"), and Limited Partners
who wish to have their  distributions  used to acquire  additional Units (to the
extent Units are available for  purchase),  may do so pursuant to such Plan. The
General Partners have the right to prohibit transfers of Units. Since inception,
the price paid for any Unit  transferred  pursuant to the Plan has been $.95 per
Unit. The price to be paid for any Unit  transferred  other than pursuant to the
Plan is subject to negotiation by the purchaser and the selling Limited Partner.
The Partnership will not redeem or repurchase Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 1996 and 1995 other than
pursuant to the Plan, net of commissions (which ranged from zero to 32.1%).


                                    1996 (1)                  1995 (1)
                             ---------------------   ------------------------
                             High    Low   Average     High     Low   Average
                             ----   ----   -------   ------   -----   -------
        First Quarter       $.95    $.95     $.95     $ .95   $ .85    $ .92
        Second Quarter       .95     .86      .93      1.00     .82      .95
        Third Quarter        .90     .61      .75       .95     .84      .91
        Fourth Quarter       .75     .55      .65       .95     .89      .94

(1)      A total of  185,355  and  281,614  Units  were  transferred  other than
         pursuant  to the Plan for the years ended  December  31, 1996 and 1995,
         respectively.

         The  capital  contribution  per Unit was $1.  All  cash  available  for
distribution  will be distributed to the partners  pursuant to the provisions of
the Partnership Agreement.

         For the  years  ended  December  31,  1996 and  1995,  the  Partnership
declared cash distributions of $3,412,500 and $3,325,002,  respectively,  to the
Limited  Partners.  For the  quarters  ended  December  31,  1996 and 1995,  the
Partnership  declared a special distribution to the Limited Partners of $262,500
and  $175,000,  respectively,  which  represented  cumulative  excess  operating
reserves.  No amounts  distributed  to partners for the years ended December 31,
1996 and 1995,  are required to be or have been treated by the  Partnership as a
return of capital for purposes of calculating  the Limited  Partners'  return on
their adjusted capital  contributions.  No  distributions  have been made to the
General Partners to date. As indicated in the chart below,  these  distributions
were declared at the close of each of the Partnership's calendar quarters. These
amounts include monthly  distributions  made in arrears for the Limited Partners
electing to receive distributions on this basis.

         Quarter Ended                                  1996            1995
         -------------                                ----------      --------
         March 31                                   $  787,500        $787,500
         June 30                                       787,500         787,501
         September 30                                  787,500         787,501
         December 31 (1)                              1,050,000        962,500

(1)      Includes special distributions to Limited Partners of $262,500 and
         $175,000, for the quarters ended December 31, 1996 and 1995,
         respectively.

         The  Partnership  intends to  continue  to make  distributions  of cash
available  for  distribution  to the  Limited  Partners  on a  quarterly  basis,
although some Limited  Partners,  in  accordance  with their  election,  receive
monthly distributions, for an annual fee.

Item 6.  Selected Financial Data

<TABLE>
<CAPTION>


                                      1996            1995            1994            1993           1992
                                 -------------   -------------   -------------   -------------  -------------
Year Ended December 31:
<S> <C>
  Revenues (1)                    $  3,593,610    $  3,667,137    $  3,670,207    $  3,674,304   $  3,606,818
  Net income (2)                     3,096,992       3,336,755       3,308,267       3,307,794      3,224,297
  Cash distributions declared (3)    3,412,500       3,325,002       3,307,500       3,150,000      3,128,126
  Net income per Unit (2) (4)            0.088            .094            .094            .094           .091
  Cash distributions declared
     per Unit (3)(4)                     0.098            .095            .095            .090           .089

At December 31:
   Total assets                    $32,437,106     $32,575,586     $32,615,349     $32,403,393    $31,524,152
   Partners' Capital                31,124,834      31,440,342      31,428,589      31,427,822     31,270,028
</TABLE>
                                       5

<PAGE>


(1)      Revenues  include equity in earnings of  unconsolidated  joint ventures
         and minority interest in income of the consolidated joint venture.

(2)      Net income for the year ended December 31, 1995,  includes $71,638 from
         a gain on sale of land and  building.  In addition,  net income for the
         years ended December 31, 1996 and 1995,  includes  $99,031 and $11,712,
         respectively, from a loss on sale of land and buildings.

(3)      Distributions for the years ended December 31, 1996 and 1995, include a
         special  distribution to the Limited Partners of $262,500 and $175,000,
         respectively, which represented cumulative excess operating reserves.

(4)      Based on the weighted average number of Limited Partner Units
         outstanding during each year.

         The above selected  financial  data should be read in conjunction  with
the financial statements and related notes contained in Item 8 hereof.

Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

         The  Partnership was organized on August 18, 1989, to acquire for cash,
either directly or through joint venture  arrangements,  both newly  constructed
and  existing  restaurant  Properties,  as well as land  upon  which  restaurant
Properties  were to be constructed,  which are leased  primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net  leases,  with the lessee  generally  responsible  for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1996, the  Partnership  owned 36 Properties,  either  directly or indirectly
through joint venture arrangements.

Liquidity and Capital Resources

         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 1996, 1995 and 1994 was cash from  operations  (which includes cash
received from tenants,  distributions from joint ventures and interest received,
less cash paid for expenses).  Cash from operations was  $3,462,668,  $3,263,685
and  $3,412,889  for  the  years  ended  December  31,  1996,   1995  and  1994,
respectively.  The  increase in cash from  operations  for 1996,  as compared to
1995,  and the decrease in cash from  operations  for 1995, as compared to 1994,
was primarily a result of changes in the  Partnership's  working  capital during
each of the respective years.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 1996, 1995 and 1994.

         In July 1995, the Partnership sold its Property in Ocoee,  Florida, for
$1,200,000 and received net sales proceeds of $1,184,865, resulting in a gain of
$71,638 for financial reporting purposes.  This Property was originally acquired
by the  Partnership in November 1990 and had a cost of  approximately  $927,900,
excluding acquisition fees and miscellaneous  acquisition costs; therefore,  the
Partnership  sold the  Property  for  approximately  $257,000  in  excess of its
original purchase price. In September 1995, the Partnership  reinvested $950,663
of the net sales  proceeds  in land and  building  of a  Shoney's  in North Fort
Myers, Florida.

         In November 1994, the Partnership received notice from the subtenant of
two of its Properties in Jacksonville, Florida, that it intended to exercise its
option to purchase the  Properties in accordance  with the terms of its sublease
agreements.  In  December  1995,  the  Partnership  sold its two  Properties  in
Jacksonville,  Florida,  to  the  subtenant  for a  total  of  $460,000,  and in
connection  therewith,  accepted  promissory  notes  in the  principal  sums  of
$240,000 and $220,000,  collateralized by mortgages on the Properties. The notes
bear interest at a rate of ten percent per annum and are being  collected in 119
equal  monthly  installments  of $2,106  and $1,931  with  balloon  payments  of
$218,252 and $200,324,  respectively,  due in December  2005. As a result of the
sale of the two  Properties,  the  Partnership  recognized a loss of $11,712 for
financial  reporting purposes for the year ended December 31, 1995. The mortgage
note  receivable  balances  at  December  31,  1996 and 1995,  of  $457,443  and
$463,833,   respectively,   include  accrued  interest  of  $3,812  and  $3,833,
respectively. Proceeds received from the collection of these mortgage notes will
be  distributed  to the Limited  Partners or will be used for other  Partnership
purposes.

                                       6

<PAGE>

         In May  1996,  the  Partnership  reinvested  the  remaining  net  sales
proceeds of approximately  $234,100 from the 1995 sale of the Property in Ocoee,
Florida,  in Middleburg  Joint Venture.  The  Partnership  has an approximate 12
percent  interest in the profits and losses of Middleburg  Joint Venture and the
remaining  interest  in  this  joint  venture  is held  by an  affiliate  of the
Partnership which has the same General Partners.

         In October 1996, the Partnership sold its Property in Orlando, Florida,
to the tenant for $1,375,000.  In connection therewith, the Partnership accepted
a promissory  note in the principal sum of  $1,388,568,  representing  the gross
sales  price  of  $1,375,000  plus  tenant  closing  costs of  $13,568  that the
Partnership financed on behalf of the tenant. The promissory note bears interest
at a rate of 10.75% per annum, is  collateralized by a mortgage on the property,
and  is  being  collected  in 12  monthly  installments  of  interest  only  and
thereafter,  168 equal monthly installments of principal and interest.  Proceeds
received from the  collection of this mortgage note will be  distributed  to the
Limited Partners or will be used for other Partnership  purposes.  This Property
was  originally  acquired by the  Partnership in December 1990 and had a cost of
approximately   $1,177,000,   excluding   acquisition  fees  and   miscellaneous
acquisition  expenses;   therefore,   the  Partnership  sold  the  Property  for
approximately $198,000 in excess of its original purchase price. Due to the fact
that the Partnership had recognized accrued rental income since the inception of
the lease relating to the  straight-lining of future scheduled rent increases in
accordance  with  generally  accepted  accounting  principles,  the  Partnership
wrote-off the  cumulative  balance of such accrued  rental income at the time of
the  sale  of  this  Property,  resulting  in a loss of  $99,031  for  financial
reporting purposes. Due to the fact that the straight-lining of future scheduled
rent increases over the term of the lease is a non-cash  accounting  adjustment,
the write-off of these amounts is a loss for financial statement purposes only.

         None of the Properties  owned by the  Partnership or the joint ventures
in which the  Partnership  owns an interest is or may be  encumbered.  Under its
Partnership  Agreement,  the  Partnership  is prohibited  from borrowing for any
purpose;  provided,  however,  that the General Partners or their affiliates are
entitled to reimbursement,  at cost, for actual expenses incurred by the General
Partners or their  affiliates  on behalf of the  Partnership.  Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the  Partnership  for which the  Partnership  reimburses the affiliates  without
interest.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions  to the  partners.  At December  31,  1996,  the  Partnership  had
$1,476,274 invested in such short-term  investments as compared to $1,620,865 at
December 31, 1995. The funds  remaining at December 31, 1996,  after the payment
of distributions and other  liabilities,  will be used to meet the Partnership's
working capital and other needs.

         During 1996, 1995 and 1994,  affiliates incurred $100,264,  $95,550 and
$84,672,   respectively,   for  certain  operating  expense  on  behalf  of  the
Partnership.  As of December 31, 1996 and 1995 the  Partnership  owed $1,830 and
$6,335,  respectively,  to  affiliates  for  such  amounts  and  accounting  and
administrative services. As of February 28, 1997, the Partnership had reimbursed
the  affiliates all such amounts.  In addition,  during the years ended December
31, 1996 and 1995, the Partnership  incurred $41,250 and $13,800,  respectively,
in real estate  disposition fees due to an affiliate as a result of its services
in  connection  with the sale of the Property in Orlando,  Florida,  and the two
Properties in Jacksonville,  Florida. The payment of such fees is deferred until
the Limited  Partners have  received the sum of their 10%  Preferred  Return and
their adjusted  capital  contributions.  Other  liabilities of the  Partnership,
including  distributions payable,  increased to $1,147,333 at December 31, 1996,
from  $1,007,453  at December 31, 1995.  The  increase in other  liabilities  is
partially  attributable  to the  Partnership's  accruing a special  distribution
payable to the Limited Partners of $262,500 at December 31, 1996, as compared to
$175,000 at December 31, 1995, from cumulative  excess operating  reserves.  The
General  Partners  believe that the  Partnership  has sufficient cash on hand to
meet its current working capital needs.

         Based on cash from operations, and cumulative excess operating reserves
for the years  ended  December  31,  1996 and  1995,  the  Partnership  declared
distributions to the Limited  Partners of $3,412,500,  $3,325,002 and $3,307,500
for the  years  ended  December  31,  1996,  1995 and 1994,  respectively.  This
represents  distributions  of $0.098  per Unit for the year ended  December  31,
1996,  and $0.095 per Unit for each of the years  ended  December  31,  1995 and
1994. No amounts  distributed or to be  distributed to the Limited  Partners for
the years ended  December  31, 1996,  1995 and 1994,  are required to be or have
been  treated  by the  Partnership  as a  return  of  capital  for  purposes  of
calculating   the   Limited   Partners'   return  on  their   adjusted   capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis.

         The General Partners believe that the Properties are adequately covered
by  insurance.  In  addition,  the General  Partners  have  obtained  contingent

                                       7

<PAGE>

liability and property coverage for the Partnership.  This insurance is intended
to reduce the Partnership's  exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The General Partners believe that the leases will continue to generate cash flow
in excess of operating expenses.

         Due to low  operating  expenses  and  ongoing  cash flow,  the  General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition,  because all leases of the Partnership's  Properties are
on a  triple-net  basis,  it is not  anticipated  that a  permanent  reserve for
maintenance  and  repairs  will be  established  at this  time.  To the  extent,
however,  that the Partnership  has  insufficient  funds for such purposes,  the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.

         The General  Partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

Results of Operations

         During the year ended  December 31,  1994,  the  Partnership  owned and
leased 30 wholly-owned Properties,  during the year ended December 31, 1995, the
Partnership owned and leased 31 wholly-owned  Properties (including one Property
in  Ocoee,  Florida,  which  was  sold  in July  1995,  and  two  Properties  in
Jacksonville,  Florida,  which were sold in  December  1995) and during the year
ended  December  31,  1996,  the  Partnership  owned and leased 28  wholly-owned
Properties  (including  one  Property  in  Orlando,  Florida,  which was sold in
October 1996).  In addition,  during the years ended December 31, 1994 and 1995,
the Partnership was a co-venturer in two separate joint ventures that each owned
and  leased  one  Property,  and one joint  venture  that  owned and  leased six
Properties,  and during 1996,  the  Partnership  was a co-venturer in four joint
ventures  that owned and leased a total of nine  Properties.  As of December 31,
1996,  the  Partnership   owned,   either  directly  or  through  joint  venture
arrangements,  36 Properties which are subject to long-term,  triple-net leases.
The leases of the  Properties  provide for minimum  base annual  rental  amounts
(payable  in  monthly   installments)  ranging  from  approximately  $41,300  to
$213,800. All of the leases provide for percentage rent based on sales in excess
of a specified  amount.  In addition,  a majority of the leases provide that,
commencing in specified lease years  (ranging  from the  third to sixth  lease
year),  the  annual  base rent required under the terms of the lease will
increase.  For further description of the Partnership's leases and Properties,
see Item 1. Business - Leases and Item 2. Properties, respectively.

         During  the  years  ended  December  31,  1996,   1995  and  1994,  the
Partnership and its consolidated  joint venture,  Woodway Joint Venture,  earned
$3,182,058,  $3,300,816  and  $3,339,665,  respectively,  in rental  income from
operating leases and earned income from direct financing leases. The decrease in
rental  and earned  income  during  1995,  as  compared  to 1994,  is  partially
attributable to a decrease of approximately  $62,600, as a result of the sale of
the  Property in Ocoee,  Florida,  in July 1995.  The  decrease was offset by an
increase  of  approximately  $39,300  during  1995 in rental  income  due to the
reinvestment  of a portion of the net sales proceeds in a Property in North Fort
Myers, Florida, in September 1995.

         Rental and earned income  decreased  approximately  $53,600  during the
year ended  December 31, 1996, as compared to the year ended  December 31, 1995,
as a result of the sale of two Properties located in Jacksonville,  Florida,  in
December  1995. In addition,  rental and earned income  decreased  approximately
$45,400  during the year ended  December 31,  1996,  as compared to December 31,
1995,  as a result of the sale of the Property in Orlando,  Florida,  in October
1996. However, as a result of Partnership  accepting mortgage notes for the sale
of the two Properties located in Jacksonville, Florida, and the Property located
in Orlando,  Florida,  interest income  increased during the year ended December
31, 1996, as discussed below.


                                       8

<PAGE>

         For the years ended December 31, 1996,  1995 and 1994, the  Partnership
also earned $31,712,  $59,085 and $51,869,  respectively,  in contingent  rental
income.  The decrease in  contingent  rental  income during 1996, as compared to
1995, is partially  attributable to decreases in gross sales relating to certain
Properties. The decrease in contingent rental income during 1996, as compared to
1995,  and the increase in 1995, as compared to 1994, is partially  attributable
to the fact  that  the  Partnership  wrote  off as  uncollectible  approximately
$23,400  in  contingent   rental  income  relating  to  the  two  Properties  in
Jacksonville,  Florida,  during 1994.  During 1995,  the  Partnership  collected
approximately $19,900 in contingent rentals for these two Properties relating to
1995 and 1994.

         During  the  years  ended  December  31,  1996,   1995  and  1994,  the
Partnership also earned $127,246, $76,445 and $46,847, respectively, in interest
and other  income.  The increase in interest  and other  income  during 1996 and
1995,  each as compared to the previous year, is primarily  attributable  to the
interest  earned on the mortgage notes  accepted in connection  with the sale of
the one  Property  located in  Orlando,  Florida,  in  October  1996 and the two
Properties located in Jacksonville, Florida, in December 1995.

         For the years ended December 31, 1996,  1995 and 1994, the  Partnership
also earned $266,500, $244,933 and $245,933,  respectively,  attributable to net
income earned by  unconsolidated  joint  ventures in which the  Partnership is a
co-venturer.  The increase in net income earned by joint ventures during 1996 is
primarily  due to the fact that the  Partnership  invested in  Middleburg  Joint
Venture in May 1996, as described above in "Liquidity and Capital Resources."

         During  the  year  ended  December  31,  1996,   four  lessees  of  the
Partnership  and its  consolidated  joint  venture,  Golden Corral  Corporation,
Carrols  Corporation,   Restaurant   Management  Services,   Inc.  and  Flagstar
Corporation,  each contributed more than ten percent of the Partnership's  total
rental income (including rental income from the Partnership's consolidated joint
venture and the Partnership's share of rental income from eight Properties owned
by joint ventures).  As of December 31, 1996, Golden Corral  Corporation was the
lessee under leases relating to four  restaurants,  Carrols  Corporation was the
lessee  under  leases  relating  to  five  restaurants,   Restaurant  Management
Services,  Inc.  was the lessee under leases  relating to five  restaurants  and
Flagstar  Corporation was the lessee under leases relating to five  restaurants.
It is anticipated  that, based on the minimum annual rental payments required by
the leases,  these four  lessees  (or groups of  affiliated  lessees)  each will
continue to contribute more than ten percent of the  Partnership's  total rental
income during 1997 and subsequent years. In addition,  three Restaurant  Chains,
Golden  Corral Family  Steakhouse  Restaurants,  Burger King and Shoney's,  each
accounted for more than ten percent of the Partnership's  total rental income in
1996 (including rental income from the Partnership's  consolidated joint venture
and the  Partnership's  share of rental  income from eight  Properties  owned by
unconsolidated  joint  ventures).  In subsequent  years, it is anticipated  that
these three Restaurant Chains each will continue to account for more than
ten percent of the Partnership's total rental income to which the Partnership is
entitled  under  the  terms of the  leases.  Any  failure  of these  lessees  or
Restaurant Chains could materially affect the Partnership's income.

         Operating expenses,  including  depreciation and amortization  expense,
were $397,587, $390,308 and $361,940 for the years ended December 31, 1996, 1995
and 1994,  respectively.  The  increase in operating  expenses  during the years
ended  December  31, 1996 and 1995,  each as compared to the previous  year,  is
primarily attributable to an increase in accounting and administrative  expenses
associated  with operating the Partnership and its Properties and an increase in
insurance  expense as a result of the  General  Partners'  obtaining  contingent
liability  and property  coverage  for the  Partnership  as  discussed  above in
"Liquidity and Capital  Resources."  The increase in operating  expenses  during
1996, as compared to 1995,  was partially  offset by a decrease in  depreciation
expense as a result of the sale of the two properties  located in  Jacksonville,
Florida, in December 1995, as described in "Liquidity and Capital Resources."

         The increase in operating  expenses  during 1995,  as compared to 1994,
was partially offset by the Partnership's establishing an allowance for doubtful
accounts during the year ended December 31, 1994, of  approximately  $18,600 for
rental and other amounts for two Properties in Jacksonville,  Florida, which had
been  recognized  as  income  in prior  years.  No  increases  were  made to the
allowance  for  doubtful  accounts  for these  Properties  during the year ended
December 31, 1995.  These  properties  were sold in December  1995, as described
above in "Liquidity and Capital Resources."

         As a result of the 1996 sale of the  Property in Orlando,  Florida,  as
described above in "Liquidity and Capital Resources," the Partnership recognized
a loss of $99,031 for the year ended December 31, 1996. In addition, as a result
of the 1995 sales of the Property in Ocoee,  Florida,  and the two Properties in
Jacksonville,  Florida, as described above in "Liquidity and Capital Resources,"
the   Partnership   recognized  a  gain  of  $71,638  and  a  loss  of  $11,712,
respectively,  during the year ended December 31, 1995. No Properties  were sold
during 1994.

         Effective  January  1,  1996,  the  Partnership  adopted  Statement  of
Financial  Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of." The statement
requires  that an entity  review  long-lived  assets  and  certain  identifiable
intangibles,  to be held and used, for impairment  whenever events or changes in
circumstances  indicate  that  the  carrying  amount  of the  asset  may  not be
recoverable.  The  Partnership  adopted this standard in 1996.  Adoption of this
standard  had no  material  effect on the  Partnership's  financial  position or
results of operations.

                                       9

<PAGE>

         The Partnership's leases as of December 31, 1996, are triple-net leases
and contain  provisions that the General  Partners  believe mitigate the adverse
effect of inflation.  Such provisions  include clauses  requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic  increases  in base rent at  specified  times  during  the term of the
lease.  Management  expects  that  increases in  restaurant  sales volume due to
inflation  and real sales growth  should  result in an increase in rental income
over  time.  Continued  inflation  also may cause  capital  appreciation  of the
Partnership's Properties.  Inflation and changing prices, however, also may have
an  adverse  impact on the sales of the  restaurants  and on  potential  capital
appreciation of the Properties.

Item 8.   Financial Statements and Supplementary Data



                                       10

<PAGE>

                          CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                                   CONTENTS


                                                                    Page

Report of Independent Accountants                                    12

Financial Statements:

  Balance Sheets                                                     13

  Statements of Income                                               14

  Statements of Partners' Capital                                    15

  Statements of Cash Flows                                           16

  Notes to Financial Statements                                      18



                                       11

<PAGE>


                     Report of Independent Accountants

To the Partners
CNL Income Fund VIII, Ltd.


We have audited the financial  statements and the financial  statement schedules
of CNL Income Fund VIII,  Ltd. (a Florida  limited  partnership)  listed in Item
14(a) of this Form 10-K.  These  financial  statements  and financial  statement
schedules  are  the   responsibility  of  the  Partnership's   management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial statement schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of CNL Income Fund VIII, Ltd. as
of December 31, 1996 and 1995,  and the results of its  operations  and its cash
flows for each of the three  years in the  period  ended  December  31,  1996 in
conformity with generally accepted accounting  principles.  In addition,  in our
opinion, the financial statement schedules referred to above, when considered in
relation to the basic financial  statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.


Orlando, Florida
January 15, 1997



                                       12

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                                 BALANCE SHEETS


                                                         December 31,
              ASSETS                            1996                   1995
              ------                         -----------            -----------

Land and buildings on operating leases,
  less accumulated depreciation              $14,169,203            $14,886,371
Net investment in direct financing
  leases                                      10,223,225             11,091,605
Investment in joint ventures                   2,940,826              2,763,798
Mortgage notes receivable                      1,862,262                463,833
Cash and cash equivalents                      1,476,274              1,620,865
Receivables, less allowance for
  doubtful accounts of $4,775 and
  $28,490                                         25,675                 38,522
Prepaid expenses                                   4,377                  2,912
Accrued rental income                          1,682,593              1,655,009
Other assets                                      52,671                 52,671
                                             -----------            -----------

                                             $32,437,106            $32,575,586
                                             ===========            ===========


  LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                             $     7,693            $     7,593
Escrowed real estate taxes payable                15,138                  5,496
Distributions payable                          1,050,000                962,500
Due to related parties                            56,880                 20,135
Rents paid in advance                             74,502                 31,864
                                             -----------            -----------
    Total liabilities                          1,204,213              1,027,588

Minority interest                                108,059                107,656

Partners' capital                             31,124,834             31,440,342
                                             -----------            -----------

                                             $32,437,106            $32,575,586
                                             ===========            ===========

                See accompanying notes to financial statements.

                                       13

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                   1996                1995               1994
                                                                ----------          ----------         -----------
<S> <C>
Revenues:
  Rental income from operating
    leases                                                      $1,867,968          $1,951,189         $1,963,549
  Earned income from direct
    financing leases                                             1,314,090           1,349,627          1,376,116
  Contingent rental income                                          31,712              59,085             51,869
  Interest and other income                                        127,246              76,445             46,847
                                                                ----------          ----------         ----------
                                                                 3,341,016           3,436,346          3,438,381
                                                                ----------          ----------         ----------

Expenses:
  General operating and
    administrative                                                 156,177             140,009             98,269
  Professional services                                             27,682              25,927             20,814
  Bad debt expense                                                      -                   -              18,881
  Real estate taxes                                                     -                   -                 505
  State and other taxes                                              4,757               6,796              4,510
  Depreciation and amortization                                    208,971             217,576            218,961
                                                                ----------          ----------         ----------
                                                                   397,587             390,308            361,940
                                                                ----------          ----------         ----------

Income Before Minority Interest
  in Income of Consolidated Joint
  Venture, Equity in Earnings of
  Unconsolidated Joint Ventures and
  Gain (Loss) on Sale of Land and
  Buildings                                                      2,943,429           3,046,038          3,076,441

Minority Interest in Income of
  Consolidated Joint Venture                                       (13,906)            (14,142)           (14,107)

Equity in Earnings of
  Unconsolidated Joint Ventures                                    266,500             244,933            245,933

Gain (Loss) on Sale of Land and
  Buildings                                                        (99,031)             59,926                 -

Net Income                                                      $3,096,992          $3,336,755         $3,308,267
                                                                ==========          ==========         ==========

Allocation of Net Income:
  General partners                                              $   31,413          $   32,714         $   33,083
  Limited partners                                               3,065,579           3,304,041          3,275,184
                                                                ----------          ----------         ----------

                                                                $3,096,992          $3,336,755         $3,308,267
                                                                ==========          ==========         ==========

Net Income Per Limited Partner Unit                             $    0.088          $    0.094         $    0.094
                                                                ==========          ==========         ==========

Weighted Average Number of Limited
  Partner Units Outstanding                                     35,000,000          35,000,000         35,000,000
                                                                ==========          ==========         ==========
</TABLE>

              See accompanying notes to financial statements.


                                       14

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                        STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>
                                 General Partners                                Limited Partners
                               --------------------   -----------------------------------------------------------------------
                                          Accumu-                                       Accumu-
                               Contri-     lated         Contri-         Distri-         lated      Syndication
                               butions    Earnings       butions         butions        Earnings       Costs         Total
                               -------    --------     -----------    ------------    -----------   -----------    ----------
<S> <C>
Balance, December 31, 1993      $1,000    $ 95,815     $35,000,000     $(9,139,636)   $ 9,485,643   $(4,015,000)   $31,427,822

  Distributions to limited
    partners ($0.095 per
     limited partner unit)          -           -               -       (3,307,500)            -             -      (3,307,500)
  Net income                        -       33,083              -               -       3,275,184            -       3,308,267
                                ------    --------     -----------    ------------    -----------   -----------    -----------

Balance, December 31, 1994       1,000     128,898      35,000,000     (12,447,136)    12,760,827    (4,015,000)    31,428,589

  Distributions to limited
    partners ($0.095 per
     limited partner unit)          -           -               -       (3,325,002)            -             -      (3,325,002)
  Net income                        -       32,714              -               -       3,304,041            -       3,336,755
                                ------    --------     -----------    ------------    -----------   -----------    -----------

Balance, December 31, 1995       1,000     161,612      35,000,000     (15,772,138)    16,064,868    (4,015,000)    31,440,342

  Distributions to limited
    partners ($0.098 per
    limited partner unit)           -           -               -       (3,412,500)            -             -      (3,412,500)
  Net income                        -       31,413              -               -       3,065,579            -       3,096,992
                                ------    --------     -----------    ------------    -----------   -----------    -----------

Balance, December 31, 1996      $1,000    $193,025     $35,000,000    $(19,184,638)   $19,130,447   $(4,015,000)   $31,124,834
                                ======    ========     ===========    ============    ===========   ===========    ===========
</TABLE>

                See accompanying notes to financial statements.

                                       15
<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>



                                                                            Year Ended December 31,
                                                                1996                 1995                 1994
                                                            -----------          -----------          ------------
<S> <C>
Increase (Decrease) in Cash and
  Cash Equivalents:

    Cash Flows from Operating
      Activities:
        Cash received from tenants                          $ 3,222,903          $ 3,074,333          $ 3,217,868
        Distributions from uncon-
          solidated joint ventures                              323,531              295,114              310,296
        Cash paid for expenses                                 (194,218)            (170,074)            (147,548)
        Interest received                                       110,452               64,312               32,273
                                                            -----------          -----------          -----------
            Net cash provided by
              operating activities                            3,462,668            3,263,685            3,412,889
                                                            -----------          -----------          -----------

    Cash Flows from Investing
      Activities:
        Proceeds from sale of land
          and buildings                                              -             1,184,865                   -
        Additions to land and
          buildings on operating
          leases                                                 (1,135)            (397,291)                  -
        Investment in direct
          financing leases                                       (1,326)            (550,911)                  -
        Investment in joint
          venture                                              (234,059)                  -                    -
        Collections on mortgage
          notes receivable                                        2,557                   -                    -
        Other                                                   (34,793)                  -                    -
                                                            -----------          -----------          ----------
            Net cash provided by
              (used in) investing
              activities                                       (268,756)             236,663                   -
                                                            -----------          -----------          ----------

    Cash Flows from Financing
      Activities:
        Distributions to limited
          partners                                           (3,325,000)          (3,307,502)          (3,150,000)
        Distributions to holder of
          minority interest                                     (13,503)             (11,526)             (13,562)
                                                            -----------          -----------          -----------
            Net cash used in
              financing activities                           (3,338,503)          (3,319,028)          (3,163,562)
                                                            -----------          -----------          -----------

Net Increase (Decrease) in Cash
  and Cash Equivalents                                         (144,591)             181,320              249,327

Cash and Cash Equivalents at
  Beginning of Year                                           1,620,865            1,439,545            1,190,218
                                                            -----------          -----------          -----------

Cash and Cash Equivalents at
  End of Year                                               $ 1,476,274          $ 1,620,865          $ 1,439,545
                                                            ===========          ===========          ===========
</TABLE>

                See accompanying notes to financial statements.

                                       16

<PAGE>
                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                1996                1995                 1994
                                                            -----------          -----------          -----------
<S> <C>
Reconciliation of Net Income to
  Net Cash Provided by Operating
  Activities:

    Net income                                              $ 3,096,992          $ 3,336,755          $ 3,308,267
                                                            -----------          -----------          -----------
    Adjustments to reconcile net
      income to net cash provided
      by operating activities:
        Depreciation                                            208,971              216,295              216,961
        Amortization                                                 -                 1,281                2,000
        Minority interest in
          income of consolidated
          joint venture                                          13,906               14,142               14,107
        Equity in earnings of
          unconsolidated joint
          ventures, net of
          distributions                                          57,031               50,181               64,363
        Loss (gain) on sale of land
          and buildings                                          99,031              (59,926)                    -
        Decrease (increase) in
          receivables                                               429               16,572               (3,118)
        Increase in prepaid
          expenses                                               (1,465)              (2,912)                  -
        Decrease in net investment
          in direct financing leases                            157,194              122,052              109,234
        Increase in accrued rental
          income                                               (219,757)            (342,862)            (352,069)
        Increase (decrease) in
          accounts payable and
          accrued expenses                                       12,203              (15,650)              10,468
        Increase (decrease) in due
          to related parties                                     (4,505)               6,335                   -
        Increase (decrease) in
          rents paid in advance                                  42,638              (78,578)              42,676
                                                            -----------          -----------          -----------
            Total adjustments                                   365,676              (73,070)             104,622
                                                            -----------          -----------          -----------

Net Cash Provided by Operating
  Activities                                                $ 3,462,668          $ 3,263,685          $ 3,412,889
                                                            ===========          ===========          ===========

Supplemental Schedule of Non-Cash
  Investing and Financing
  Activities:

    Mortgage notes accepted in
      exchange for sale of land
      and buildings                                         $ 1,375,000          $   460,000          $        -
                                                            ===========          ===========          ==========

    Distributions declared and
      unpaid at December 31                                 $ 1,050,000          $   962,500          $   945,000
                                                            ===========          ===========          ===========
</TABLE>

                 See accompanying notes to financial statements.



                                       17

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1996, 1995 and 1994


1.       Significant Accounting Policies:

         Organization  and Nature of Business - CNL Income Fund VIII,  Ltd. (the
         "Partnership") is a Florida limited  partnership that was organized for
         the purpose of acquiring both newly constructed and existing restaurant
         properties,  as well as properties  upon which  restaurants  were to be
         constructed,  which are leased  primarily  to operators of national and
         regional fast-food and family-style restaurant chains.

         The general partners of the Partnership are CNL Realty Corporation (the
         "Corporate General Partner"), James M. Seneff, Jr. and Robert A.
         Bourne.  Mr. Seneff and Mr. Bourne are also 50 percent shareholders of
         the Corporate General Partner.  The general partners have
         responsibility for managing the day-to-day operations of the
         Partnership.

         Real  Estate  and  Lease  Accounting  - The  Partner-ship  records  the
         acquisition of land and buildings at cost,  including  acquisition  and
         closing costs. Land and buildings are leased to unrelated third parties
         on a triple-net basis, whereby the tenant is generally  responsible for
         all operating  expenses  relating to the property,  including  property
         taxes, insurance, maintenance and repairs. The leases are accounted for
         using either the direct financing or the operating method. Such methods
         are described below:

                  Direct  financing  method - The leases accounted for using the
                  direct  financing  method are recorded at their net investment
                  (which at the inception of the lease generally  represents the
                  cost of the asset) (Note 4).  Unearned  income is deferred and
                  amortized  to income  over the lease  terms so as to produce a
                  constant   periodic  rate  of  return  on  the   Partnership's
                  investment in the leases.

                  Operating  method - Land and  building  leases  accounted  for
                  using the  operating  method are recorded at cost,  revenue is
                  recognized as rentals are earned and  depreciation  is charged
                  to operations as incurred.  Buildings are  depreciated  on the
                  straight-line  method over their estimated  useful lives of 30
                  years.  When  scheduled  rentals  vary  during the lease term,
                  income is recognized on a straight-line basis so as to produce
                  a constant periodic rent over the lease term commencing on the
                  date the property is placed in service.

                                       18


<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


1.       Significant Accounting Policies - Continued:

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing leases,  plus any accrued rental income, are removed from the
         accounts and gains or losses from sales are  reflected  in income.  The
         general   partners  of  the  Partnership   review  the  properties  for
         impairment  whenever events or changes in  circumstances  indicate that
         the  carrying  amount  of the  assets  may not be  recoverable  through
         operations.  The general  partners  determine  whether an impairment in
         value has occurred by comparing the estimated future  undiscounted cash
         flows, including the residual value of the property,  with the carrying
         cost of the individual property. If an impairment is indicated,  a loss
         will be  recorded  for the  amount by which the  carrying  value of the
         asset exceeds its fair market value.

         When the  collection  of amounts  recorded as rental or other income is
         considered  to be  doubtful,  an  adjustment  is made to  increase  the
         allowance for doubtful accounts,  which is netted against  receivables,
         and to decrease rental or other income or increase bad debt expense for
         the  current  period,  although  the  Partnership  continues  to pursue
         collection of such amounts.  If amounts are subsequently  determined to
         be uncollectible,  the  corresponding  receivable and the allowance for
         doubtful accounts are decreased accordingly.

         Investment  in Joint  Ventures - The  Partnership  accounts  for its 88
         percent  interest  in Woodway  Joint  Venture  using the  consolidation
         method.   Minority  interest  represents  the  minority  joint  venture
         partner's  proportionate  share  of the  equity  in  the  Partnership's
         consolidated joint venture. All significant  intercompany  accounts and
         transactions have been eliminated.

         The   Partnership's   investments  in  Asheville  Joint  Venture,   CNL
         Restaurant  Investments II and  Middleburg  Joint Venture are accounted
         for using the equity method since the  Partnership  shares control with
         affiliates which have the same general partners.

                                       19

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


1.       Significant Accounting Policies - Continued:

         Cash and Cash Equivalents - The Partnership considers all highly liquid
         investments  with a maturity of three months or less when  purchased to
         be cash  equivalents.  Cash  and cash  equivalents  consist  of  demand
         deposits at commercial  banks and money market funds (some of which are
         backed by government  securities).  Cash equivalents are stated at cost
         plus accrued interest, which approximates market value.

         Cash  accounts  maintained  on  behalf  of the  Partnership  in  demand
         deposits  at  commercial  banks  and  money  market  funds  may  exceed
         federally insured levels;  however, the Partnership has not experienced
         any losses in such  accounts.  The  Partnership  limits  investment  of
         temporary cash investments to financial  institutions  with high credit
         standing;  therefore, the Partnership believes it is not exposed to any
         significant credit risk on cash and cash equivalents.

         Income Taxes - Under  Section 701 of the  Internal  Revenue  Code,  all
         income,  expenses and tax credit items flow through to the partners for
         tax  purposes.  Therefore,  no  provision  for federal  income taxes is
         provided in the accompanying  financial statements.  The Partnership is
         subject to certain state taxes on its income and property.

         Additionally,  for tax  purposes,  syndication  costs are  included  in
         Partnership equity and in the basis of each partner's  investment.  For
         financial  reporting  purposes,  syndication  costs are netted  against
         partners' capital and represent a reduction of Partnership equity and a
         reduction in the basis of each partner's investment.

         Use of Estimates - The general  partners of the Partnership have made a
         number of estimates and assumptions relating to the reporting of assets
         and liabilities and the disclosure of contingent assets and liabilities
         to prepare these  financial  statements in  conformity  with  generally
         accepted accounting principles.  Actual results could differ from those
         estimates.

         New Accounting  Standard - Effective  January 1, 1996, the  Partnership
         adopted   Statement  of  Financial   Accounting   Standards   No.  121,
         "Accounting for the Impairment of Long- Lived Assets and for Long-Lived
         Assets to Be Disposed Of." The statement requires that an entity review
         long-lived assets and certain identifiable intangibles,  to be held and
         used, for


                                       20

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


1.       Significant Accounting Policies - Continued:

         impairment  whenever events or changes in  circumstances  indicate that
         the carrying  amount of the asset may not be  recoverable.  Adoption of
         this  standard had no material  effect on the  Partnership's  financial
         position or results of operations.

2.       Leases:

         The Partnership leases its land and buildings primarily to operators of
         national and  regional  fast-food  and  family-style  restaurants.  The
         leases are accounted for under the provisions of Statement of Financial
         Accounting  Standards  No. 13,  "Accounting  for  Leases."  Nine of the
         leases have been  classified  as operating  leases and 19 of the leases
         have  been  classified  as  direct  financing  leases.  For the  leases
         classified as direct  financing  leases,  the building  portions of the
         property leases are accounted for as direct  financing leases while the
         land portion of 15 of these leases are operating leases.  Substantially
         all  leases  are  for  15 to 20  years  and  provide  for  minimum  and
         contingent rentals. In addition, the tenant pays all property taxes and
         assessments,  fully maintains the interior and exterior of the building
         and carries insurance  coverage for public liability,  property damage,
         fire and extended  coverage.  The lease options generally allow tenants
         to  renew  the  leases  for two to four  successive  five-year  periods
         subject to the same terms and  conditions  of the initial  lease.  Most
         leases  also allow the tenant to purchase  the  property at fair market
         value after a specified portion of the lease has elapsed.

3.       Land and Buildings on Operating Leases:

         Land and  buildings on operating  leases  consisted of the following at
         December 31:

                                                     1996             1995
                                                  -----------      -----------

                  Land                            $ 9,167,336      $ 9,675,533
                  Buildings                         6,231,430        6,231,430
                                                  -----------      -----------
                                                   15,398,766       15,906,963
                  Less accumulated
                    depreciation                   (1,229,563)      (1,020,592)
                                                  -----------      -----------

                                                  $14,169,203      $14,886,371
                                                  ===========      ===========
                                       21

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


3.       Land and Buildings on Operating Leases - Continued:

         In July 1995, the Partnership sold its property in Ocoee,  Florida, for
         $1,200,000 and received net sales proceeds of $1,184,865,  resulting in
         a gain of $71,638 for financial reporting  purposes.  This property was
         originally  acquired by the Partnership in November 1990 and had a cost
         of approximately $927,900, excluding acquisition fees and miscellaneous
         acquisition  costs;  therefore,  the Partnership  sold the property for
         approximately  $257,000 in excess of its original  purchase  price.  In
         September  1995, the Partnership  reinvested  $950,663 of the net sales
         proceeds  in land and  building  of a  Shoney's  in North  Fort  Myers,
         Florida.

         In  December  1995,  the  Partnership  sold  two of its  properties  in
         Jacksonville,  Florida,  for a total of $460,000 and accepted the sales
         proceeds in the form of two promissory  notes (Note 6),  resulting in a
         loss of $11,712 for financial reporting purposes.

         In October 1996, the Partnership sold its property in Orlando, Florida,
         to the tenant for  $1,375,000  and accepted  the sales  proceeds in the
         form of a  promissory  note  (Note 6).  This  property  was  originally
         acquired  by the  Partnership  in  December  1990  and  had a  cost  of
         approximately $1,177,000,  excluding acquisition fees and miscellaneous
         acquisition expenses;  therefore, the Partnership sold the property for
         approximately $198,000 in excess of its original purchase price. Due to
         the fact that the  Partnership  had  recognized  accrued  rental income
         since the  inception of the lease  relating to the  straight-lining  of
         future  scheduled rent increases in accordance with generally  accepted
         accounting principles, the Partnership wrote-off the cumulative balance
         of such accrued rental income at the time of the sale of this property,
         resulting in a loss of $99,031 for financial reporting purposes. Due to
         the fact that the  straight-lining  of future rent  increases  over the
         term of the lease is a non-cash accounting adjustment, the write-off of
         these amounts is a loss for financial statement purposes only.

         Some leases provide for escalating  guaranteed minimum rents throughout
         the  lease  terms.  Income  from  these  scheduled  rent  increases  is
         recognized on a straight-line  basis over the terms of the leases.  For
         the years ended  December  31,  1996,  1995 and 1994,  the  Partnership
         recognized  $219,757,  $342,862  and  $352,069,  respectively,  of such
         rental income.



                                   22

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


3.       Land and Buildings on Operating Leases - Continued:

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 1996:

                  1997                                      $ 1,694,371
                  1998                                        1,704,859
                  1999                                        1,704,859
                  2000                                        1,735,498
                  2001                                        1,825,526
                  Thereafter                                 14,868,044
                                                            -----------
                                                            $23,533,157
                                                            ===========

         Since  lease  renewal  periods  are  exercisable  at the  option of the
         tenant, the above table only presents future minimum lease payments due
         during  the  initial  lease  terms.  In  addition,  this table does not
         include any amounts for future contingent rentals which may be received
         on the leases based on a percentage of the tenant's gross sales.

4.       Net Investment in Direct Financing Leases:

         The  following  lists the  components  of the net  investment in direct
         financing leases at December 31:

                                                  1996              1995
                                              ------------      -----------

            Minimum lease payments
              receivable                      $ 20,329,407      $ 23,393,940
            Estimated residual
              values                             3,040,615         3,229,496
            Less unearned income               (13,146,797)      (15,531,831)
                                              ------------      ------------

            Net investment in
              direct financing
              leases                          $ 10,223,225      $ 11,091,605
                                              ============      ============

         In July 1995 and October 1996, the  Partnership  sold its properties in
         Ocoee and  Orlando,  Florida,  respectively,  for  which  the  building
         portions  had  been  classified  as  a  direct  financing   leases.  In
         connection  therewith,  the gross  investment  (minimum  lease payments
         receivable and estimated  residual values) and unearned income relating
         to these properties were removed from the accounts and the gain or loss
         from the sale  relating  to the land  portions of the  properties  were
         reflected in income (Note 3).

                                       23

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


4.       Net Investment in Direct Financing Leases - Continued:

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 1996:

                  1997                                   $ 1,389,622
                  1998                                     1,389,622
                  1999                                     1,389,622
                  2000                                     1,389,622
                  2001                                     1,413,128
                  Thereafter                              13,357,791
                                                         -----------
                                                         $20,329,407
                                                         ===========

         The above table does not include  future  minimum  lease  payments  for
         renewal  periods or for contingent  rental payments that may become due
         in future periods (see Note 3).

5.       Investment in Joint Ventures:

         The  Partnership  has an 86 percent  and a 37 percent  interest  in the
         profits  and  losses of  Asheville  Joint  Venture  and CNL  Restaurant
         Investments II,  respectively.  The remaining  interests in these joint
         ventures are held by affiliates of the Partnership  which have the same
         general partners.

         In May 1996, the Partnership entered into a joint venture  arrangement,
         Middleburg  Joint Venture,  with an affiliate of the Partnership  which
         has the same  general  partners  to hold one  restaurant  property.  In
         connection therewith, the Partnership contributed $234,059 to the joint
         venture and has a 12 percent  interest in the profits and losses of the
         joint venture.

                                       24

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


5.       Investment in Joint Ventures - Continued:

         Asheville Joint Venture and Middleburg Joint Venture each own and lease
         one property,  and CNL  Restaurant  Investments  II owns and leases six
         properties  to  an  operator  of  national  fast-food  or  family-style
         restaurants.  The  following  presents  the joint  ventures'  combined,
         condensed financial information at December 31:

                                                      1996           1995
                                                   ----------     ---------

            Land and buildings on
              operating leases, less
              accumulated depreciation             $6,654,361     $6,299,941
            Net investment in direct
              financing lease                       1,349,611             -
            Cash                                        9,859            387
            Receivables                                13,840             -
            Prepaid expenses                              888            278
            Accrued rental income                      91,074         65,254
            Liabilities                                 9,992            461
            Partners' capital                       8,109,641      6,365,399
            Revenues                                  862,821        711,701
            Net income                                688,253        539,159

         The Partnership  recognized  income  totalling  $266,500,  $244,933 and
         $245,933  for the  years  ended  December  31,  1996,  1995  and  1994,
         respectively, from these joint ventures.

6.       Mortgage Notes Receivable:

         During  1995,  the  Partnership  accepted two  promissory  notes in the
         principal sum totalling $460,000, in connection with the sale of two of
         its properties in Jacksonville,  Florida.  The promissory notes,  which
         are  collateralized by mortgages on the properties,  bear interest at a
         rate of ten percent  per annum,  and are being  collected  in 119 equal
         monthly  installments  of $2,106 and $1,931,  with balloon  payments of
         $218,252 and $200,324, respectively, due in December 2005.

         In  addition,  in  connection  with the sale in 1996 of its property in
         Orlando,  Florida,  the  Partnership  accepted a promissory note in the
         principal  sum of  $1,388,568,  representing  the gross  sales price of
         $1,375,000  plus tenant  closing costs of $13,568 that the  Partnership
         financed on behalf of the tenant. The promissory note bears interest at
         a rate of 10.75% per annum, is collateralized by a mortgage on


                                       25

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


6.       Mortgage Notes Receivable - Continued:

         the  property  and is being  collected  in 12 monthly  installments  of
         interest  only  and  thereafter,  168  equal  monthly  installments  of
         principal and interest.

         The mortgage  notes  receivable  consisted of the following at December
         31:

                                                          1996          1995
                                                       ----------    ----------

            Principal balance                          $1,846,011    $  460,000
            Accrued interest receivable                    16,251         3,833
                                                       ----------    ----------

                                                       $1,862,262    $  463,833
                                                       ==========    ==========

         The general  partners believe that the estimated fair value of mortgage
         notes  receivable at December 31, 1996,  approximates  the  outstanding
         principal  amount based on  estimated  current  rates at which  similar
         loans would be made to borrowers  with  similar  credit and for similar
         maturities.

7.       Allocations and Distributions:

         Generally, all net income and net losses of the Partnership,  excluding
         gains and losses from the sale of properties,  are allocated 99 percent
         to the  limited  partners  and one  percent  to the  general  partners.
         Distributions  of net  cash  flow are made 99  percent  to the  limited
         partners and one percent to the general  partners;  provided,  however,
         that the one percent of net cash flow to be  distributed to the general
         partners  is  subordinated  to receipt by the  limited  partners  of an
         aggregate,  ten percent,  cumulative,  noncompounded  annual  return on
         their adjusted capital contributions (the "10% Preferred Return").

         Generally,  net  sales  proceeds  from the sale of  properties,  to the
         extent  distributed,  will be distributed first to the limited partners
         in an  amount  sufficient  to  provide  them with  their 10%  Preferred
         Return,  plus the return of their adjusted capital  contributions.  The
         general   partners  will  then  receive,   to  the  extent   previously
         subordinated   and  unpaid,   a  one  percent  interest  in  all  prior
         distributions   of  net  cash  flow  and  a  return  of  their  capital
         contributions.  Any remaining  sales  proceeds will be  distributed  95
         percent  to the  limited  partners  and  five  percent  to the  general
         partners.  Any  gain  from  the  sale of a  property  is,  in  general,
         allocated


                                       26

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


7.       Allocations and Distributions - Continued:

         in the same manner as net sales  proceeds are  distributable.  Any loss
         from the sale of a property is, in general,  allocated  first, on a pro
         rata  basis,  to  partners  with  positive  balances  in their  capital
         accounts;  thereafter,  95 percent  to the  limited  partners  and five
         percent to the general partners.

         During  the  years  ended  December  31,  1996,   1995  and  1994,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,412,500,  $3,325,002 and $3,307,500,  respectively. No distributions
         have been made to the general partners to date.



                                       27

<PAGE>



                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


8.       Income Taxes:

         The following is a reconciliation of net income for financial reporting
         purposes to net income for federal  income tax  purposes  for the years
         ended December 31:

<TABLE>
<CAPTION>


                                                     1996             1995              1994
                                                  ----------       ----------        -------
<S> <C>
                  Net income for financial
                    reporting purposes            $3,096,992       $3,336,755        $3,308,267

                  Depreciation for tax
                    reporting purposes in
                    in excess of depreci-
                    ation for financial
                    reporting purposes              (219,372)        (219,653)         (221,663)

                  Direct financing leases
                    recorded as operating
                    leases for tax
                    reporting purposes               157,197          122,052           109,234

                  Allowance for doubtful
                    accounts                         (23,716)           8,067               (74)

                  Accrued rental income             (219,757)        (342,862)         (352,069)

                  Rents paid in advance               42,637          (70,010)           34,109

                  Gain or loss on sale of land
                    and  buildings  for tax
                    reporting purposes in
                    excess of gain or loss
                    for financial reporting
                    purposes                          99,031          161,548                -

                  Equity in earnings of
                    unconsolidated  joint
                    ventures for tax
                    reporting  purposes
                    in  excess  of (less
                    than)  equity  in
                    earnings of unconsolidated
                    joint ventures for financial
                    reporting purposes                13,320           (4,016)           10,074

                  Minority interest in
                    timing differences of
                    consolidated joint
                    venture                            1,677            2,783             2,858
                                                   ----------       ----------        ----------

                  Net income for federal
                    income tax purposes           $2,948,009       $2,994,664        $2,890,736
                                                  ==========       ==========        ==========
</TABLE>

                                       28

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


9.       Related Party Transactions:

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders  of CNL Group,  Inc., the parent company of
         CNL Investment Company and CNL Fund Advisors, Inc. The other individual
         general partner,  Robert A. Bourne,  is the president of CNL Investment
         Company and CNL Fund Advisors,  Inc. CNL Income Fund Advisors, Inc. was
         a  wholly  owned  subsidiary  of CNL  Group,  Inc.  until  its  merger,
         effective  January 1, 1996,  with CNL Fund  Advisors,  Inc.  During the
         years ended December 31, 1996,  1995 and 1994, CNL Investment  Company,
         CNL Income Fund Advisors, Inc. and CNL Fund Advisors, Inc. (hereinafter
         referred to collectively as the  "Affiliates")  each performed  certain
         services for the Partnership, as described below.

         During  the years  ended  December  31,  1996,  1995 and 1994,  certain
         Affiliates acted as manager of the Partnership's properties pursuant to
         a management agreement with the Partnership.  In connection  therewith,
         the Partnership agreed to pay the Affiliates an annual, non-cumulative,
         subordinated management fee of one percent of the sum of gross revenues
         from properties  wholly owned by the Partnership and the  Partnership's
         allocable  share of gross  revenues  from  joint  ventures,  but not in
         excess of competitive fees for comparable services.  These fees will be
         incurred  and will be payable only after the limited  partners  receive
         their  10%  Preferred  Return.  Due to the  fact  that  these  fees are
         non-cumulative,  if the  limited  partners  do not  receive  their  10%
         Preferred Return in any particular year, no management fees will be due
         or payable for such year. As a result of such threshold,  no management
         fees were incurred  during the years ended December 31, 1996,  1995 and
         1994.

         Certain   Affiliates   are  also   entitled   to  receive  a  deferred,
         subordinated real estate  disposition fee, payable upon the sale of one
         or more  properties  based on the lesser of one-half  of a  competitive
         real  estate  commission  or three  percent  of the sales  price if the
         Affiliates  provide a substantial amount of services in connection with
         the  sale.  However,  if the net sales  proceeds  are  reinvested  in a
         replacement  property,  no such real  estate  disposition  fees will be
         incurred  until  such  replacement  property  is sold and the net sales
         proceeds are  distributed.  The payment of the real estate  disposition
         fee is  subordinated  to  receipt  by the  limited  partners  of  their
         aggregate 10% Preferred Return, plus their adjusted capital

                                       29

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


9.       Related Party Transactions - Continued:

         contributions.  During the years ended  December 31, 1996 and 1995, the
         Partnership  incurred $41,250 and $13,800,  respectively,  in deferred,
         subordinated real estate disposition fees as the result of the sales of
         the  property  in  Orlando,   Florida,   and  the  two   properties  in
         Jacksonville,   Florida.   No   deferred,   subordinated   real  estate
         disposition fees were incurred for the year ended December 1994.

         During the years ended December 31, 1996, 1995 and 1994, the Affiliates
         provided accounting and administrative services to the Partnership on a
         day-to-day basis. The Partnership incurred $89,317, $73,365 and $40,461
         for the years ended December 31, 1996, 1995 and 1994, respectively, for
         such services.

         The due to related parties consisted of the following at December 31:

                                                         1996            1995
                                                       -------         --------

                  Due to Affiliates:
                    Expenditures incurred on
                      behalf of the Partnership        $    -          $ 2,481
                    Accounting and administrative
                      services                           1,830           3,854
                    Deferred, subordinated real
                      estate disposition fee            55,050          13,800
                                                       -------         -------
                                                       $56,880         $20,135
                                                       =======         =======


                                       30

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1996, 1995 and 1994


10.      Concentration of Credit Risk:

         The  following  schedule  presents  total rental and earned income from
         individual  lessees,  each  representing  more than ten  percent of the
         Partnership's   total   rental  and  earned   income   (including   the
         Partnership's  share  of  total  rental  and  earned  income  from  the
         unconsolidated  joint  ventures)  for at least one of the  years  ended
         December 31:

                                                    1996       1995       1994
                                                  --------   --------   --------

            Golden Corral
                Corporation                       $663,889   $663,943   $653,615
            Restaurant Management
                Services, Inc.                     533,990    525,260    469,479
            Carrols Corporation                    526,034    532,990    536,989
            Flagstar Enterprises,
                Inc. and Quincy's
                Restaurants, Inc.                  356,720    363,335    370,614

         In addition,  the following  schedule  presents total rental and earned
         income from individual  restaurant chains,  each representing more than
         ten  percent  of the  Partnership's  total  rental  and  earned  income
         (including  the  Partnership's  share of total rental and earned income
         from the unconsolidated  joint ventures),  for the years ended December
         31:

                                                 1996       1995       1994
                                               --------   --------   --------
                  Burger King                  $989,480   $987,871   $991,553
                  Golden Corral
                    Family Steakhouse
                    Restaurants                 681,042    663,943    653,615
                  Shoney's                      609,072    526,649    489,743

         Although  the  Partnership's   properties  are  geographically  diverse
         throughout the United States and the  Partnership's  lessees  operate a
         variety of restaurant concepts,  default by any one of these lessees or
         restaurant chains could significantly  impact the results of operations
         of the Partnership. However, the general partners believe that the risk
         of such a default is reduced due to the  essential or important  nature
         of these Properties for the on-going operations of the lessees.


                                       31
<PAGE>


Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

         None.



                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

         The General Partners of the Registrant are James M. Seneff, Jr., Robert
A.  Bourne  and CNL  Realty  Corporation,  a Florida  corporation.  The  General
Partners  manage  and  control  the  Partnership's   affairs  and  have  general
responsibility   and  the  ultimate  authority  in  all  matters  affecting  the
Partnership's  business.  The  Partnership  has  available  to it the  services,
personnel and experience of CNL Fund Advisors,  Inc., CNL Group,  Inc. and their
affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 50, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  director and Chief Executive Officer since its formation in
1980.  CNL Group,  Inc.  is the  parent  company of CNL  Securities  Corp.,  CNL
Investment  Company,  CNL Fund Advisors,  Inc., and prior to its merger with CNL
Fund Advisors,  Inc., effective January 1, 1996, CNL Income Fund Advisors,  Inc.
Mr. Seneff is Chief  Executive  Officer,  and has been a director and registered
principal of CNL Securities  Corp.,  which served as the managing  dealer in the
Partnership's  offering of Units,  since its formation in 1979.  Mr. Seneff also
has held the position of President and a director of CNL Management  Company,  a
registered investment advisor,  since its formation in 1976, has served as Chief
Executive Officer and Chairman of the Board of CNL Investment Company, and Chief
Executive Officer and Chairman of the Board of Commercial Net Lease Realty, Inc.
since  1992,  has served as the  Chairman  of the Board and the Chief  Executive
Officer of CNL Realty  Advisors,  Inc.  since its  inception in 1991,  served as
Chairman of the Board and Chief  Executive  Officer of CNL Income Fund Advisors,
Inc.  since its  inception  in 1994 through  December  31,  1995,  has served as
Chairman of the Board and Chief  Executive  Officer of CNL Fund  Advisors,  Inc.
since  its  inception  in 1994,  and has held the  position  of Chief  Executive
Officer  and a  director  of CNL  Institutional  Advisors,  Inc.,  a  registered
investment  advisor,  since its inception in 1990.  In addition,  Mr. Seneff has
served as  Chairman  of the Board and Chief  Executive  Officer of CNL  American
Properties  Fund,  Inc.  since 1994, and has served as Chairman of the Board and
Chief Executive  Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors,  Inc. since January 1997. Mr. Seneff  previously served on
the Florida State  Commission on Ethics and is a former member and past Chairman
of the State of Florida  Investment  Advisory  Council,  which recommends to the
Florida  Board  of  Administration  investments  for  various  Florida  employee
retirement  funds.  The Florida  Board of  Administration,  Florida's  principal
investment advisory and money management agency, oversees the investment of more
than $40 billion of retirement funds.  Since 1971, Mr. Seneff has been active in
the  acquisition,  development  and  management  of real  estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
joint  venturer in over 100 real  estate  ventures  involved  in the  financing,
acquisition,  construction and rental of office buildings,  apartment complexes,
restaurants,  hotels  and other  real  estate.  Included  in these  real  estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr.  Seneff,  directly or through an affiliated  entity,  serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd.,  CNL Income Fund III,  Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd.,  CNL Income Fund VI, Ltd.,  CNL Income Fund VII,  Ltd., CNL Income
Fund IX, Ltd.,  CNL Income Fund X, Ltd.,  CNL Income Fund XI,  Ltd.,  CNL Income
Fund XII,  Ltd.,  CNL Income Fund XIII,  Ltd.,  CNL Income Fund XIV,  Ltd.,  CNL
Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII,  Ltd. and
CNL Income Fund XVIII,  Ltd. (the "CNL Income Fund  Partnerships"),  public real
estate limited  partnerships with investment  objectives similar to those of the
Partnership,  in which  Mr.  Seneff  serves  as a general  partner.  Mr.  Seneff
received his degree in Business  Administration from Florida State University in
1968.

         Robert A.  Bourne,  age 49, is  President  and  Treasurer of CNL Group,
Inc., President,  a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, CNL Fund



                                       32

<PAGE>

Advisors,  Inc., and prior to its merger with CNL Fund Advisors, Inc., effective
January 1, 1996, CNL Income Fund Advisors, Inc., and President, Chief Investment
Officer  and a  director  of CNL  Institutional  Advisors,  Inc.,  a  registered
investment  advisor.  Mr.  Bourne also has served as a director  since 1992,  as
President  from July 1992 to February  1996,  and since  February  1996, as Vice
Chairman of the Board of Directors,  Secretary  and Treasurer of Commercial  Net
Lease Realty,  Inc. In addition,  Mr. Bourne has served as a director  since its
inception in 1991, as President  from 1991 to February  1996, as Secretary  from
February  1996 to July 1996,  and since  February  1996,  as Treasurer  and Vice
Chairman of CNL Realty  Advisors,  Inc. In  addition,  Mr.  Bourne has served as
President and a director of CNL American  Properties  Fund, Inc. since 1994, and
has served as President and a director of CNL American  Realty Fund,  Inc. since
1996 and of CNL Real Estate  Advisors,  Inc. since January 1997. Upon graduation
from Florida State  University in 1970,  where he received a B.A. in Accounting,
with honors,  Mr.  Bourne  worked as a certified  public  accountant  and,  from
September  1971  through  December  1978,  was  employed  by  Coopers & Lybrand,
Certified  Public  Accountants,  where  he  held  the  position  of tax  manager
beginning in 1975.  From January 1979 until June 1982,  Mr. Bourne was a partner
in the  accounting  firm of Cross & Bourne  and from July 1982  through  January
1987, he was a partner in the accounting firm of Bourne & Rose, P.A.,  Certified
Public  Accountants.  Mr. Bourne,  who joined CNL Securities  Corp. in 1979, has
participated  as a general  partner or joint  venturer  in over 100 real  estate
ventures  involved in the  financing,  acquisition,  construction  and rental of
office  buildings,  apartment  complexes,  restaurants,  hotels  and other  real
estate.  Included in these real estate ventures are  approximately  64 privately
offered  real  estate  limited  partnerships  in which Mr.  Bourne,  directly or
through an affiliated  entity,  serves or has served as a general partner.  Also
included  are the CNL Income  Fund  Partnerships,  public  real  estate  limited
partnerships with investment objectives similar to those of the Partnership,  in
which Mr. Bourne serves as a general partner.

         CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida.  Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners.  CNL
Realty  Corporation  was organized to serve as the corporate  general partner of
real estate limited partnerships,  such as the Partnership,  organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.

         CNL Fund  Advisors,  Inc.,  provides  certain  management  services  in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation  organized  in 1994 under the laws of the State of Florida,  and its
principal  office is  located  at 400 East South  Street,  Suite  500,  Orlando,
Florida  32801.  CNL Fund  Advisors,  Inc. is a wholly owned  subsidiary  of CNL
Group,  Inc., a diversified  real estate  company,  and was organized to perform
property acquisition, property management and other services.

         CNL  Group,  Inc.,  which is the parent  company of CNL Fund  Advisors,
Inc., is a diversified real estate corporation  organized in 1980 under the laws
of the State of Florida.  Other  subsidiaries and affiliates of CNL Group,  Inc.
include a property  development and management company,  two investment advisory
companies,  and seven corporations  organized as strategic business units. James
M.  Seneff,  Jr.,  an  individual  General  Partner of the  Partnership,  is the
Chairman of the Board,  Chief  Executive  Officer,  and a director of CNL Group,
Inc.  Mr.  Seneff and his wife own all of the  outstanding  shares of CNL Group,
Inc.

         The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or  subsidiaries  in the discretion of the Boards of Directors of
those companies,  but, except as specifically indicated, do not serve as members
of the Boards of Directors of those  entities.  The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.

         John T. Walker, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development.  He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. and serves as Executive
Vice President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors,
Inc.  From May 1992 to May 1994, he was Executive Vice President for Finance and
Administration and Chief Financial Officer of Z Music, Inc., a cable television
network which was subsequently acquired by Gaylord Entertainment, where he was
responsible for overall financial and administrative management and planning.
From January 1990 through April 1992, Mr. Walker was Chief Financial Officer of
the First  Baptist Church in Orlando, Florida.  From April 1984 through December
1989, he was a partner in the accounting firm of Chastang, Ferrell & Walker,
P.A., where he was the partner in charge



                                       33

<PAGE>

of audit and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse.  Mr. Walker is a Cum Laude graduate
of Wake Forest University with a B.S. in Accountancy and is a certified public
accountant.

         Lynn E. Rose, age 48, a certified public accountant, has served as
Chief Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until December 1993.  In addition, Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994.  She
has served as Chief Operating Officer, Vice President and Secretary of CNL
Corporate Services, Inc. since November 1994.  Ms. Rose also has served as Chief
Financial Officer and Secretary of CNL Institutional Advisors, Inc. since its
inception in 1990, a director of CNL Realty Advisors, Inc. since its inception
in 1991, Secretary of CNL Realty Advisors, Inc. since its inception in 1991
(excluding February 1996 to July 1996), Treasurer of CNL Realty Advisors, Inc.
from 1991 to February 1996, Secretary and Treasurer of Commercial Net Lease
Realty, Inc. from 1992 to February 1996, Secretary of CNL Income Fund Advisors,
Inc. since its inception in 1994 to December 1995, and a director, Secretary and
Treasurer of CNL Fund Advisors, Inc. since 1994 and has served as a director,
Secretary and Treasurer of CNL Real Estate Advisors, Inc. since January 1997.
Ms. Rose also has served as Secretary and Treasurer of CNL American Properties
Fund, Inc. since 1994, and has served as Secretary and Treasurer of CNL American
Realty Fund, Inc. since 1996. Ms. Rose also currently serves as Secretary for
approximately 50 additional corporations.  Ms. Rose oversees the management
information services, administration, legal compliance, accounting,  tenant
compliance, and reporting for over 250 corporations, partnerships, and joint
ventures. Prior to joining CNL, Ms. Rose was a partner with Robert A. Bourne in
the accounting firm of Bourne & Rose, P.A., Certified Public Accountants. Ms.
Rose holds a B.A. in Sociology from the University of Central Florida and is a
registered financial and operations principal of CNL Securities Corp. She was
licensed as a certified public accountant in 1979.

         Jeanne A. Wall, age 38, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator.  In 1985, Ms. Wall became Vice President of CNL Securities Corp.
and, in 1987, she became a Senior Vice President of CNL Securities Corp.  In
this capacity, Ms. Wall serves as national marketing sales director and oversees
the national marketing plan for the CNL investment programs.  In addition, Ms.
Wall oversees the partnership administration and investor services for programs
offered through participating brokers.  Ms. Wall also has served as Senior Vice
President of CNL Institutional Advisors, Inc., a registered investment advisor,
from 1990 to 1993, as Vice President of CNL Realty Advisors, Inc. since its
inception in 1991, as Vice  President of Commercial Net Lease Realty, Inc. since
1992, as Executive Vice President of CNL Income Fund Advisors, Inc. from its
inception in 1994 to December 1995, as Executive Vice President of CNL Fund
Advisors, Inc. since 1994, and as Executive Vice President of CNL American
Properties Fund, Inc. since 1994.  In addition, Ms. Wall has served as Executive
Vice President of CNL Real Estate Advisors, Inc. since January 1997 and as
Executive Vice President of CNL American Realty Fund, Inc. since 1996.  Ms. Wall
holds a B.A. in Business Administration from Linfield College and is a
registered principal of CNL Securities Corp.  Ms. Wall currently serves as a
trustee on the board of the Investment Program Association and on the Direct
Participation Program committee for the National Association of Securities
Dealers (NASD).

         Steven D. Shackelford, age 33, has served as Chief Financial Officer of
CNL Fund Advisors,  Inc. since September 1996. Mr. Shackelford joined CNL Group,
Inc. in September 1996. He also currently serves as the Chief Financial  Officer
of CNL American  Properties  Fund,  Inc.  From March 1995 to July 1996, he was a
senior  manager  in  the  national  office  of  Price  Waterhouse  where  he was
responsible  for advising  foreign clients seeking to raise capital and a public
listing in the United  States.  From August  1992 to March 1995,  he served as a
manager  in  the  Price  Waterhouse,   Paris,   France  office  serving  several
multinational  clients.  Mr. Shackelford was an audit staff and senior from 1986
to 1992 in the  Orlando,  Florida  office of Price  Waterhouse.  Mr  Shackelford
received  a  B.A.  in  Accounting,  with  honors,  and  a  Masters  of  Business
Administration   from  Florida  State  University  and  is  a  certified  public
accountant.



                                       34

<PAGE>

Item 11.  Executive Compensation

         Other than as  described in Item 13, the  Partnership  has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates.  There are no compensatory plans or arrangements  regarding
termination of employment or change of control.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of February 28, 1997, no person was known to the  Registrant to be a
beneficial owner of more than five percent of the Units.

         The following table sets forth, as of February 28, 1997, the beneficial
ownership interests of the General Partners in the Registrant.

         Title of Class            Name of Partner         Percent of Class
-------------------------------    ----------------------  ----------------
 General Partnership Interests     James M. Seneff, Jr.           45%
                                   Robert A. Bourne               45%
                                   CNL Realty Corporation         10%
                                                                 ----
                                                                 100%
                                                                 ====

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest in the  Registrant,  except as noted above.  There are no  arrangements
which at a subsequent date may result in change in control of the Registrant.


Item 13.  Certain Relationships and Related Transactions

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation and amounts of compensation,  fees and distributions paid or payable
by the  Partnership  to the General  Partners and their  affiliates for the year
ended  December 31, 1996,  exclusive of any  distributions  to which the General
Partners or their  affiliates  may be entitled by reason of their  purchase  and
ownership of Units.


<TABLE>
<CAPTION>

                                                                                       Amount Incurred
      Type of Compensation                                                               For the Year
          and Recipient                      Method of Computation                 Ended December 31, 1996
----------------------------            -----------------------------          -------------------------------
<S> <C>
Reimbursement to affiliates             Operating expenses are                 Operating expenses incurred on
for operating expenses                  reimbursed at the lower of             behalf of the Partnership:
                                        cost or 90 percent of the              $100,264
                                        prevailing rate at which
                                        comparable services could have         Accounting and administrative
                                        been obtained in the same              services:  $89,317
                                        geographic area.  Affiliates
                                        of the General Partners from
                                        time to time incur certain
                                        operating expenses on behalf
                                        of the Partnership for which
                                        the Partnership reimburses the
                                        affiliates without interest.



</TABLE>

                                       35


<PAGE>

<TABLE>
<CAPTION>
                                                                                       Amount Incurred
      Type of Compensation                                                               For the Year
          and Recipient                      Method of Computation                 Ended December 31, 1996
----------------------------            -----------------------------          -------------------------------
<S> <C>

Annual, subordinated  manage-           One percent of the sum of              $ - 0 -
ment fee to affiliates                  gross operating revenues from
                                        Properties wholly owned by the
                                        Partnership plus the
                                        Partnership's allocable share
                                        of gross revenues of joint
                                        ventures in which the
                                        Partnership is a co-venturer,
                                        subordinated to certain
                                        minimum returns to the Limited
                                        Partners.  The management fee
                                        will not exceed competitive
                                        fees for comparable services.
                                        Due to the fact that these are
                                        non-cumulative if the Limited
                                        Partners do not receive their
                                        10% Preferred Return in any
                                        particular years no management
                                        fees will be due or payable
                                        for such year.

Deferred, subordinated real             A deferred, subordinated real          $41,250
estate disposition fee payable          estate disposition fee,
to affiliates                           payable upon sale of one or
                                        more Properties, in an amount
                                        equal to the lesser of (i)
                                        one-half of a competitive real
                                        estate commission, or (ii)
                                        three percent of the sales
                                        price of such Property or
                                        Properties.  Payment of such
                                        fee shall be made only if
                                        affiliates of the General
                                        Partners provide a substantial
                                        amount of services in
                                        connection with the sale of a
                                        Property or Properties and
                                        shall be subordinated to
                                        certain minimum returns to the
                                        Limited Partners.  However, if
                                        the net sales are reinvested
                                        in a replacement property, no
                                        such real estate disposition
                                        fee will be incurred until
                                        such replacement property is
                                        sold an the net sales proceeds
                                        are distributed.



</TABLE>

                                       36

<PAGE>

<TABLE>
<CAPTION>
                                                                                       Amount Incurred
      Type of Compensation                                                               For the Year
          and Recipient                      Method of Computation                 Ended December 31, 1996
----------------------------            -----------------------------          -------------------------------
<S> <C>
General Partners' deferred,             A deferred, subordinated share         $ - 0 -
sub-ordinated share of                  equal to one percent of
Partnership net cash flow               Partnership distributions of
                                        net cash flow, subordinated to
                                        certain minimum returns to the
                                        Limited Partners.

General Partners' deferred,             A deferred, subordinated share         $ - 0 -
sub-ordinated share of                  equal to five percent of
Partnership net sales proceeds          Partnership distributions of
from a sale or sales                    such net sales proceeds,
                                        subordinated to certain
                                        minimum returns to the Limited
                                        Partners.

</TABLE>




                                       37

<PAGE>

                                    PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as part of this report.

    1.  Financial Statements

            Report of Independent Accountants

            Balance Sheets at December 31, 1996 and 1995

            Statements of Income for the years ended December 31, 1996, 1995 and
            1994

            Statements of Partners' Capital for the years ended December 31,
            1996, 1995 and 1994

            Statements of Cash Flows for the years ended December 31, 1996, 1995
            and 1994

            Notes to Financial Statements

    2.  Financial Statement Schedules

            Schedule II - Valuation  and  Qualifying  Accounts for the years
            ended  December 31, 1996,  1995 and 1994

            Schedule III - Real Estate and Accumulated Depreciation at December
            31, 1996

            Notes to Schedule III - Real Estate and Accumulated Depreciation at
            December 31, 1996

            Schedule IV - Mortgage Loans on Real Estate at December 31, 1996

            All other Schedules are omitted as the required information is
            inapplicable  or is presented in the  financial  statements or notes
            thereto.

    3.  Exhibits

            3.1      Affidavit and Certificate of Limited Partnership of CNL
                     Income Fund VIII, Ltd. (Included as Exhibit 3.2 to
                     Registration Statement No. 33-31482 on Form S-11 and
                     incorporated herein by reference.)

            4.1      Affidavit and Certificate of Limited Partnership of CNL
                     Income Fund VIII, Ltd. (Included as Exhibit 3.2 to
                     Registration Statement No. 33-31482 on Form S-11 and
                     incorporated herein by reference.)

            4.2      Amended and Restated Agreement of Limited Partnership of
                     CNL Income Fund VIII,  Ltd.  (Included  as Exhibit 4.2 to
                     Form  10-K  filed  with  the  Securities  and Exchange
                     Commission   on   April   1,   1996,   and incorporated
                     herein by reference.)

            10.1     Management Agreement between CNL Income Fund VIII, Ltd. and
                     CNL Investment Company (Included as Exhibit 10.1 to Form
                     10-K filed with the Securities and Exchange Commission on
                     April 1, 1996, and incorporated herein by reference.)


                                       38

<PAGE>

            10.2     Assignment   of   Management   Agreement   from   CNL
                     Investment Company to CNL Income Fund Advisors,  Inc.
                     (Included as Exhibit 10.2 to Form 10-K filed with the
                     Securities and Exchange Commission on March 30, 1995,
                     and incorporated herein by reference.)

            10.3     Assignment of Management Agreement from CNL Income Fund
                     Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
                     Exhibit 10.3 to Form 10-K filed with the Securities and
                     Exchange Commission on April 1, 1996, and incorporated
                     herein by reference.)

            27       Financial Data Schedule (Filed herewith.)

    (b)     The Registrant  filed no reports on Form 8-K during the period
            October 1, 1996 through December 31, 1996.


                                       39

<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 25th day of
March, 1997.

                                  CNL INCOME FUND VIII, LTD.

                                  By: CNL REALTY CORPORATION
                                      General Partner

                                      /s/ Robert A. Bourne
                                      ----------------------------
                                      ROBERT A. BOURNE, President


                                  By: ROBERT A. BOURNE
                                      General Partner

                                      /s/ Robert A. Bourne
                                      ---------------------------
                                      ROBERT A. BOURNE


                                  By: JAMES M. SENEFF, JR.
                                      General Partner

                                      /s/ James M. Seneff, JR.
                                      ----------------------------
                                      James M. Seneff, Jr.


<PAGE>

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>


       Signature                                Title                                   Date
       ---------                              ---------                                 ----
<S> <C>
/s/ Robert A. Bourne                President Treasurer and Director               March 25, 1997
--------------------------         (Principal Financial and Accounting
Robert A. Bourne                   Officer)


 /s/ James M. Seneff, Jr.          Chief Executive Officer and Director            March 25, 1997
---------------------------        (Principal Executive Officer)
James M. Seneff, Jr.
</TABLE>

<PAGE>



                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1996



<TABLE>
<CAPTION>                                                                                              Costs Capitalized
                                                                                                           Subsequent
                                                                          Initial Cost                  To Acquisition
                                                                  ---------------------------       -----------------------
                                                                                  Buildings
                                                  Encum-                             and             Improve-      Carrying
                                                 brances           Land          Improvements         ments         Costs
                                                 -------         --------        -------------      ----------     ---------
<S> <C>
Properties the Partnership
  has Invested in Under
  Operating Leases:

    Burger King Restaurants:
      Brandon, Florida                                -         $  478,467         $       -        $       -      $     -
      New City, New York                              -            372,977                 -                -            -
      Mansfield, Ohio                                 -            377,395                 -                -            -
      Syracuse, New York                              -            363,431                 -                -            -
      New Philadelphia, Ohio                          -            310,920                 -                -            -
      Baseball City, Florida (g)                      -            394,813                 -                -            -

    Denny's Restaurant:
      Tiffin, Ohio                                    -            143,592            335,971               -            -

    Golden Corral Family
      Steakhouse Restaurants:
        College Station, Texas                        -            517,623                 -           877,505           -
        Houston, Texas                                -            663,999                 -         1,129,910           -
        Beaumont, Texas                               -            552,646                 -           893,054           -
        Grand Prairie, Texas                          -            681,824                 -           914,235           -

    Hardee's Restaurant:
      Jefferson, Ohio                                 -            150,587                 -                -            -

    Jack in the Box Restaurants:
      Waco, Texas                                     -            412,942                 -                -            -
      Mesa, Arizona                                   -            609,921                 -                -            -

    KFC Restaurant:
      Norton Shores, Michigan                         -            177,897                 -                -            -

    Perkins Restaurant:
      Memphis, Tennessee                              -            431,065                 -                -            -

    Popeyes Famous Fried
      Chicken Restaurant:
        Jacksonville, Florida                         -            103,063            114,507          149,978           -

    Quincy's Family Steakhouse
      Restaurant:
        Statesville, North Carolina                   -            257,225                 -                -            -
</TABLE>



<PAGE>






<TABLE>
<CAPTION>
                                                                                                                 Life
           Gross Amount at Which Carried                                                                       on Which
              at Close of Period (c)                                                                         Depreciation
-------------------------------------------------                                                             in Latest
                    Buildings                                                  Date                             Income
                       and                                Accumulated         of Con-          Date          Statement is
   Land            Improvements           Total           Depreciation       struction       Acquired          Computed
----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>

$  478,467                   (f)       $   478,467          $       -            1991          10/90            (d)
   372,977                   (f)           372,977                  -            1977          03/91            (d)
   377,395                   (f)           377,395                  -            1989          03/91            (d)
   363,431                   (f)           363,431                  -            1987          03/91            (d)
   310,920                   (f)           310,920                  -            1989          03/91            (d)
   394,813                   (f)           394,813                  -            1991          02/91            (d)


   143,592           $  335,971            479,563              37,028           1990          03/91            (h)



   517,623              877,505          1,395,128             184,316           1990          09/90            (b)
   663,999            1,129,910          1,793,909             226,395           1990          10/90            (b)
   552,646              893,054          1,445,700             195,820           1990          11/90            (b)
   681,824              914,235          1,596,059             191,279           1990          11/90            (b)


   150,587                   (f)           150,587                  -            1990          11/90            (d)


   412,942                   (f)           412,942                  -            1991          11/90            (d)
   609,921                   (f)           609,921                  -            1991          02/92            (d)


   177,897                   (f)           177,897                  -            1990          03/91            (d)


   431,065                   (f)           431,065                  -            1990          11/90            (d)



   103,063              264,485            367,548              52,521           1979          09/90            (b)


   257,225                   (f)           257,225                  -            1991          10/91            (d)
</TABLE>


                                      F-2

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                               December 31, 1996


<TABLE>
<CAPTION>
                                                                                             Costs Capitalized
                                                                    Initial Cost                 Subsequent
                                                              -------------------------       To Acquisition
                                                                          Buildings       ---------------------
                                                 Encum-                      and          Improve-    Carrying
                                                brances        Land      Improvements      ments       Costs
                                                --------     ---------   ------------     ---------   --------
<S> <C>
    Shoney's Restaurants:
      Sun City, Florida                              -         382,883             -        736,865         -
      Brooksville, Florida                           -         233,288             -             -          -
      Bayonet Point, Florida                         -         418,464             -             -          -
      Memphis, Tennessee                             -         368,290        601,660            -          -
      North Fort Myers, Florida                      -         398,423             -             -          -

    Wendy's Old Fashioned
      Hamburger Restaurant:
        Midlothian, Virginia                         -         365,601             -        477,745         -
                                                            ----------     ----------    ----------   -------

                                                            $9,167,336     $1,052,138    $5,179,292   $     -
                                                            ==========     ==========    ==========   =======

Property of Joint Venture
  in Which the Partnership
  has an 86% Interest and
  has Invested in Under an
  Operating Lease:

    Burger King Restaurant:
      Asheville, North Carolina                      -      $  438,695     $  450,432    $       -    $     -
                                                            ==========     ==========    ==========   =======

Properties of Joint Venture in
  Which the  Partnership has a
  37% Interest and has
  Invested in Under Operating Leases:

    Burger King Restaurants:
      Columbus, Ohio                                 -      $  345,696     $  651,985    $       -    $     -
      San Antonio, Texas                             -         350,479        623,615            -          -
      Pontiac, Michigan                              -         277,192        982,200            -          -
      Raceland, Louisiana                            -         174,019        986,879            -          -
      New Castle, Indiana                            -         264,239        662,265            -          -
      Hastings, Minnesota                            -         155,553        657,159            -          -
                                                            ----------     ----------    ----------   -------

                                                            $1,567,178     $4,564,103    $       -    $     -
                                                            ==========     ==========    ==========   =======

Property of Joint Venture
  in Which the Partnership
  has a 12% Interest and has
  Invested in Under an
  Operating Lease:

    Golden Corral Family
      Steakhouse Restaurant:
        Middleburg Heights, OH                       -      $  521,571     $       -     $       -    $     -
                                                            ==========     ==========    ==========   =======
</TABLE>





<PAGE>

<TABLE>
<CAPTION>

                                                                                                                Life
           Gross Amount at Which Carried                                                                       on Which
              at Close of Period (c)                                                                         Depreciation
---------------------------------------------------                                                            in Latest
                     Buildings                                                  Date                             Income
                        and                                Accumulated         of Con-          Date          Statement is
    Land            Improvements           Total           Depreciation       struction       Acquired          Computed
 ----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>

    382,883              736,865          1,119,748             143,201          1991           10/90            (b)
    233,288                   (f)           233,288                  -           1991           12/90            (d)
    418,464                   (f)           418,464                  -           1989           06/91            (d)
    368,290              601,660            969,950             108,079          1991           08/91            (b)
    398,423                   (f)           398,423                  -           1991           09/95            (d)



    365,601              477,745            843,346              90,924          1991           03/91            (b)
 ----------           ----------        -----------          ----------

 $9,167,336           $6,231,430        $15,398,766          $1,229,563
 ==========           ==========        ===========          ==========








 $  438,695           $  450,432        $   889,127          $   86,920          1986           03/91            (b)
 ==========           ==========        ===========          ==========








 $  345,696           $  651,985        $   997,681          $  114,380          1986           09/91            (b)
    350,479              623,615            974,094             109,403          1986           09/91            (b)
    277,192              982,200          1,259,392             172,311          1987           09/91            (b)
    174,019              986,879          1,160,898             173,132          1988           09/91            (b)
    264,239              662,265            926,504             116,184          1988           09/91            (b)
    155,553              657,159            812,712             115,288          1990           09/91            (b)
 ----------           ----------        -----------          ----------

 $1,567,178           $4,564,103        $ 6,131,281          $  800,698
 ==========           ==========        ===========          ==========









 $  521,571                   (f)       $   521,571          $       -           1995           05/96            (d)
 ==========                             ===========          ==========
</TABLE>


                                      F-3

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                               December 31, 1996


<TABLE>
<CAPTION>
                                                                                                Costs Capitalized
                                                                                                 Subsequent
                                                               Initial Cost                      To Acquisition
                                                        ------------------------------      -----------------------
                                                                          Buildings
                                          Encum-                             and             Improve-      Carrying
                                         brances           Land          Improvements         ments         Costs
                                         -------       ----------        -------------      ----------    ---------
<S> <C>
Properties the Partnership
  has Invested in Under
  Direct Financing Leases:

    Burger King Restaurants:
      Brandon, Florida                        -         $       -          $       -        $  483,107     $     -
      New City, New York                      -                 -             629,110               -            -
      Mansfield, Ohio                         -                 -             560,698               -            -
      Syracuse, New York                      -                 -             549,253               -            -
      New Philadelphia, Ohio                  -                 -             592,918               -            -
      Baseball City, Florida (g)              -                 -                  -           551,446           -

    Hardee's Restaurants:
      Brunswick, Ohio                         -            116,199            457,907               -            -
      Grafton, Ohio                           -             66,092            411,798               -            -
      Jefferson, Ohio                         -                 -             443,444               -            -
      Lexington, Ohio                         -            124,707            433,264               -            -

    Jack in the Box Restaurant:
      Waco, Texas                             -                 -                  -           406,745           -
      Mesa, Arizona                           -                 -             583,429               -            -

    KFC Restaurants:
      Grand Rapids, Michigan                  -            169,175            620,623               -            -
      Norton Shores, Michigan                 -                 -             509,228               -            -

    Perkins Restaurant:
      Memphis, Tennessee                      -                 -                  -           594,154           -

    Quincy's Family Steakhouse
      Restaurant:
        Statesville, North Carolina           -                 -             705,444               -            -

    Shoney's Restaurants:
      Brooksville, Florida                    -                 -                  -           644,369           -
      Bayonet Point, Florida                  -                 -             575,985               -            -
      North Fort Myers, Florida               -                 -             552,240               -            -
                                                        ----------         ----------       ----------     -------

                                                        $  476,173         $7,625,341       $2,679,821     $     -
                                                        ==========         ==========       ==========     =======

Property of Joint Venture
  in Which the Partnership
  has a 12% Interest and has
  Invested in Under a Direct
  Financing Lease:

    Golden Corral Family
      Steakhouse Restaurant:
        Middleburg Heights, Ohio              -         $       -          $1,357,288       $       -      $     -
                                                        ==========         ==========       ==========     =======



</TABLE>



<TABLE>
<CAPTION>

           Gross Amount at Which Carried                                                                      Life
                at Close of Period (c)                                                                    Depreciation
--------------------------------------------------                                                         in Latest
                    Buildings                                               Date                             Income
                       and                             Accumulated         of Con-          Date          Statement is
   Land            Improvements           Total        Depreciation       struction       Acquired          Computed
----------         ------------        -----------     ------------       ---------       --------        ----------
<S> <C>





     -                 (f)                  (f)             (d)               1991          10/90             (d)
     -                 (f)                  (f)             (d)               1977          03/91             (d)
     -                 (f)                  (f)             (d)               1989          03/91             (d)
     -                 (f)                  (f)             (d)               1987          03/91             (d)
     -                 (f)                  (f)             (d)               1989          03/91             (d)
     -                 (f)                  (f)             (d)               1991          02/91             (d)


    (f)                (f)                  (f)             (e)               1990          11/90             (e)
    (f)                (f)                  (f)             (e)               1990          11/90             (e)
     -                 (f)                  (f)             (d)               1990          11/90             (d)
    (f)                (f)                  (f)             (e)               1990          11/90             (e)


     -                 (f)                  (f)             (d)               1991          11/90             (d)
     -                 (f)                  (f)             (d)               1991          02/92             (d)


    (f)                (f)                  (f)             (e)               1990          02/91             (e)
     -                 (f)                  (f)             (d)               1990          03/91             (d)


     -                 (f)                  (f)             (d)               1990          11/90             (d)



     -                 (f)                  (f)             (d)               1991          10/91             (d)


     -                 (f)                  (f)             (d)               1991          12/90             (d)
     -                 (f)                  (f)             (d)               1989          06/91             (d)
     -                 (f)                  (f)             (d)               1991          09/95             (d)











     -                 (f)                  (f)             (d)               1995          05/96             (d)

</TABLE>


                                      F-4

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1996



(a)   Transactions in real estate and accumulated depreciation during 1996, 1995
      and 1994, are summarized as follows:

<TABLE>
<CAPTION>


                                                                  Accumulated
                                                      Cost        Depreciation
                                                 -------------    -------------
<S> <C>
      Properties the Partnership
        has Invested in Under
        Operating Leases:

          Balance, December 31, 1993              $16,101,234       $  628,704
          Reclassified from direct
            financing lease                           335,971               -
          Depreciation expense                             -           216,961
                                                  -----------       ----------

          Balance, December 31, 1994               16,437,205          845,665
          Acquisitions                                398,423               -
          Dispositions                               (928,665)         (41,368)
          Depreciation expense                             -           216,295
                                                  -----------       ----------

          Balance, December 31, 1995               15,906,963        1,020,592
          Dispositions                               (508,197)              -
          Depreciation expense                             -           208,971
                                                  -----------       ----------

          Balance, December 31, 1996              $15,398,766       $1,229,563
                                                  ===========       ==========


      Property of Joint Venture in Which
        the  Partnership has an 86%
        Interest and has Invested in
        Under an Operating Lease:

          Balance, December 31, 1993              $   889,127       $   41,876
          Depreciation expense                             -            15,015
                                                  -----------       ----------

          Balance, December 31, 1994                  889,127           56,891
          Depreciation expense                             -            15,015
                                                  -----------       ----------

          Balance, December 31, 1995                  889,127           71,906
          Depreciation expense                             -            15,014
                                                  -----------       ----------

          Balance, December 31, 1996              $   889,127       $   86,920
                                                  ===========       ==========
</TABLE>


                                      F-5

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

              NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
                            DEPRECIATION - CONTINUED

                               December 31, 1996



                                                          Accumulated
                                           Cost           Depreciation
                                      ------------        ------------

Properties of Joint Venture in
  Which the Partnership has a 37
  Interest and has Invested in
  Under Operating Leases:

    Balance, December 31, 1993         $ 6,131,281          $  344,288
    Depreciation expense                        -              152,136
                                       -----------          ----------

    Balance, December 31, 1994           6,131,281             496,424
    Depreciation expense                        -              152,137
                                       -----------          ----------

    Balance, December 31, 1995           6,131,281             648,561
    Depreciation expense                        -              152,137
                                       -----------          ----------

    Balance, December 31, 1996         $ 6,131,281          $  800,698
                                       ===========          ==========


Property of Joint Venture in
  Which the  Partnership  has
  a 12% Interest and has Invested
  in Under an Operating Lease:

    Balance, December 31, 1995         $        -           $       -
    Acquisition                            521,571                  -
    Depreciation expense (d)                    -                   -
                                       -----------          ---------

    Balance, December 31, 1996         $   521,571          $       -
                                       ===========          =========


(b)      Depreciation expense is computed for buildings and improvements based
         upon estimated lives of 30 years.

(c)      As of December 31, 1996, the aggregate cost of the Properties  owned by
         the  Partnership   and  its   consolidated   joint  venture,   and  the
         unconsolidated  joint  ventures  for federal  income tax  purposes  was
         $26,172,699 and $8,899,267, respectively. All of the leases are treated
         as operating leases for federal income tax purposes.

(d)      For financial reporting purposes,  the portion of the lease relating to
         the building has been recorded as a direct financing lease. The cost of
         the  building  has  been  included  in the  net  investment  in  direct
         financing leases; therefore, depreciation is not applicable.

(e)      For financial reporting  purposes,  the lease for land and building has
         been  recorded as a direct  financing  lease.  The cost of the land and
         building  has been  included  in net  investment  in  direct  financing
         leases; therefore, depreciation is not applicable.

(f)      For  financial  reporting  purposes,  certain  components  of the lease
         relating to land and building have been recorded as a direct  financing
         lease.  Accordingly,  costs relating to these  components of this lease
         are not shown.



                                      F-6

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

              NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
                            DEPRECIATION - CONTINUED

                               December 31, 1996


(g)      The  restaurant on this property was  converted  from a Popeyes  Famous
         Fried Chicken Restaurant to a Burger King restaurant in February 1993.

(h)      Effective  January 1, 1994,  the lease for this  property  was amended,
         resulting in the  reclassification of the building portion of the lease
         as an operating  lease.  The building was recorded at net book value as
         of January 1, 1994, and depreciated  over its remaining  estimated life
         of approximately 27 years.



                                      F-7

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                        (A Florida Limited Partnership)

                  SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                               December 31, 1996

<TABLE>
<CAPTION>
                                                                                                              Principal
                                                                                                                Amount
                                                                                                               of Loans
                                                                                              Carrying        Subject to
                                             Final       Periodic                  Face       Amount of       Delinquent
                           Interest        Maturity      Payment     Prior       Amount of    Mortgages        Principal
Description                  Rate            Date         Terms      Liens       Mortgages       (1)          or Interest
--------------------       --------     -------------    --------    -----      ----------   ----------       -----------
<S> <C>
Church's
Jacksonville, FL
First Mortgage              10.00%      December 2005      (2)        $  -      $  240,000    $  240,655      $        -

Church's
Jacksonville, FL
First Mortgage              10.00%      December 2005      (3)           -         220,000       220,600               -

Ponderosa
Orlando, FL
First Mortgage              10.75%      October 2011       (4)           -       1,388,568      1,401,007              -
                                                                      -----     ----------     ----------     ----------

    Total                                                             $  -       $1,848,568    $1,862,262     $        -
                                                                      =====      ==========    ==========     ==========
</TABLE>


(1)      The tax carrying value of the notes is $1,702,613.

(2)      Monthly  payments of  principal  and interest at an annual rate of 10%,
         with a balloon payment at maturity of $218,252.

(3)      Monthly  payments of  principal  and interest at an annual rate of 10%,
         with a balloon payment at maturity of $200,324.

(4)      Twelve monthly payments of interest only and thereafter, 168 equal
         monthly payments of principal and interest at an annual rate of 10.75%.

(5)      The changes in the carrying amounts are summarized as follows:


                                          1996           1995           1994
                                       ----------     ----------     ---------

     Balance at beginning of
       period                          $  463,833     $       -      $       -

     New mortgage loans                 1,388,568        460,000             -

     Accrued interest                      16,251          3,833             -

     Collection of principal and
       interest                            (6,390)            -              -
                                       ----------     ----------     ---------

     Balance at end of period          $1,862,262     $  463,833     $       -
                                       ==========     ==========     =========




                                      F-8

<PAGE>



                                    EXHIBITS




<PAGE>

                                 EXHIBIT INDEX


Exhibit Number                                                              Page


      3.1         Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund VIII, Ltd. (Included as Exhibit 3.2 to Registration
                  Statement No. 33-31482 on Form S-11 and incorporated herein by
                  reference.)

      4.1         Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund VIII, Ltd. (Included as Exhibit 3.2 to Registration
                  Statement No. 33-31482 on Form S-11 and incorporated herein by
                  reference.)

      4.2         Amended and Restated  Agreement of Limited  Partnership of CNL
                  Income Fund VIII,  Ltd.  (Included as Exhibit 4.2 to Form 10-K
                  filed with the Securities and Exchange  Commission on April 1,
                  1996, and incorporated herein by reference.)

     10.1         Management Agreement between CNL Income Fund VIII, Ltd. and
                  CNL Investment Company (Included as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on April 1,
                  1996, and incorporated herein by reference.)

     10.2         Assignment of Management Agreement from CNL Investment Company
                  to CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to
                  Form 10-K filed with the Securities and Exchange Commission on
                  March 30, 1995, and incorporated herein by reference.)

     10.3         Assignment of Management Agreement from CNL Income Fund
                  Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit
                  10.3 to Form 10-K filed with the Securities and Exchange
                  Commission on April 1, 1996, and incorporated herein by
                  reference.)

     27           Financial Data Schedule (Filed herewith.)


                                      i